Prabhu CEO Sherchan exploting legal loopoles to extend tenure !

KATHMANDU, APRIL 15:  The controversy over Prabhu Bank CEO Ashok Sherchan’s tenure extension has taken a new twist, as he postponed the hearing on his writ petition scheduled at the Supreme Court (SC) for today. The next hearing has now been fixed for tomorrow. 

This marks Sherchan’s second writ filed at the apex court in an effort to continue as CEO. Although his earlier petition had already been registered, it was scheduled for hearing only on June 12, 2025. In the meantime, Sherchan filed a second writ last Sunday (April 13), which was granted a hearing within just two working days. However, he opted to defer Tuesday’s hearing himself, pushing it to Wednesday.

The first petition has already been delayed multiple times. Initially filed some 8 months back, it was set for hearing on April 4, 2025, but was postponed to April 11, and later to June 12. Following this delay, Sherchan would be compelled to leave office by April 21, 2025, as per the Patan High Court’s ruling. The new writ aims to avoid that scenario.

In the first petition, advocate Anita Thapa was named the opposing party. In the second, Sherchan has listed the Patan High Court and Nepal Rastra Bank as respondents. The upcoming hearing is viewed as a landmark, potentially setting a precedent for the term limits of several other CEOs in the banking sector. Sherchan is reportedly lobbying hard for an interim order in his favour.

Legal loophole or misinterpretation?

Sherchan claims the Patan High Court misinterpreted Section 37 of the prevalent Banking and Financial Institution Act (BAFIA) 2017, arguing that the court wrongly calculated his tenure from the date the Act came into effect.

According to him, the law’s provision to count only terms served “after the Act is enacted” was not applied correctly. He maintains that his term should begin from the date of his first appointment after the Act came into force—not from the Act’s effective date.

Sherchan was first appointed on February 1, 2015, and reappointed on January 24, 2019. The earlier BAFIA 2006 (2063 B.S.) did not limit CEO tenure, but the current one restricts it to two terms.

In his new petition, Sherchan states that under the current BAFIA, his first formal appointment occurred only on January 24, 2019, and his second on January 26, 2023. Therefore, his term should last until January 27, 2027. He argues the High Court erred in counting from April 23, 2017, and prematurely setting his end date as April 21, 2025.

High Court cut Sherchan’s term short

Earlier, the Patan High Court had issued a verdict terminating Sherchan’s term 19 months early. A joint bench of Acting Chief Judge Mahesh Sharma Paudel and Justice Prakash Kharel ruled that his tenure would expire on April 21, 2025.

The court reasoned that since BAFIA 2017 limits the CEO’s term to two tenures from the date of enactment, Sherchan’s time in office must be calculated from April 23, 2017. Based on that, his tenure was deemed to expire next year.

Other CEOs under scrutiny

Not only Sherchan, but several other banking executives face similar scrutiny under the same provision. These include Ashok Shamsher Rana of Himalayan Bank, Jyoti Prakash Pandey of Nepal Investment Bank, and Saroj Kaji Tuladhar of Goodwill Finance. Rana has held his position since 2008/09 and Pandey since 2013/14. Questions have long swirled about how some CEOs managed to retain their roles by maneuvering through regulatory grey areas or leveraging influence over the central bank.

The SC’s upcoming ruling on Sherchan’s latest writ is expected to have wide-reaching implications for the banking sector.