After the United States refused to extradite Pawan Kumar Karki, an absconding banking fraudster, the government is all set to issue a red corner notice in his name to bring him back to the country. The US had cited lack of a legal provision for the extradition. Karki is on the run after committing a fraud of Rs 2.5 billion at the troubled Capital Merchant Banking and Finance Limited (CMBFL) where he was managing director. The government had requested the US to extradite him through the Nepali embassy. In response, the US had sent a formal letter to the Nepal government stating that there is no extradition treaty between the two countries and that there is no legal ground to extradite anyone staying in the US legally.

The US also suggested taking measures such as issuing a red corner notice, which may help in his extradition. The Finance Ministry is now initiating a process to issue the red corner notice in coordination with the Home Ministry. "We have already prepared a proposal in this regard and we will send it to the Home Ministry after getting approval from the Finance Minister," said a senior official at the MoF. Karki is in the police's wanted list for fraud and officials believe that a red corner notice will be helpful in bringing him back and initiating legal action against him. 

Capital Merchant had landed in trouble after loans that went to the promoters against the banking norms were not repaid. According to the Nepal Rastra Bank (NRB), 44 loanees related to Karki and his relatives have to pay back Rs 2.5 billion out of the total loan of Rs 3 billion. "About Rs 500 million in loans are at good hands," said an official of the NRB. The central bank said property of the loanes could recover up to Rs 1.5 billion and an additional Rs 1 billion is required to restore the company's health. 

An NRB official said the finance company is facing problems in paying back the depositors as a large amount of loans related to Karki and his relatives have not been recovered. Of the total deposit of Rs 2.87 billion, the company has so far paid Rs 460 million. The actual status of the company is yet to be ascertained as its due diligent audit is undergoing currently, according to the NRB. 

Police have already arrested Shabhu Bahadur KC, the chief accomplice of Karki, who issued loans in the name of fake companies to provide funds to Karki. KC also happens to be the father-in-law of Karki. Police have also arrested Amirjung Khadka, a founder of the Capital Merchant, and its shareholder Januka KC. A team of Finance Ministry officials had also found that Karki was involved in transferring earnings of Nepali workers in South Korea to the US illegally.