The Kathmandu District Court has granted an additional seven-day remand of Sulav Agrawal and Deepak Bhatta, who are currently in police custody in a money laundering case.

A bench of Judge Tilak Bahadur Karki on Wednesday ordered the extension of their remand. Bhatta was arrested on April 2, and Agrawal on April 4, in connection with the case.

Agrawal is the chairman of Jagdamba Holdings under the Shankar Group, while Bhatta heads Infinity Holdings.

Both individuals are alleged to have been involved in suspicious activities, including manipulation of major public procurement contracts, securing licences for hydropower and banking and insurance companies, and influencing tax rates in annual budgets—often in collusion with political leaders, public officials, and employees in positions of authority.

The investigation initially led to the arrest of Shanker Lal Agrawal, father of Sulav Agrawal, who was later released.

The arrest of Sulav followed a broader investigation triggered by the detention of businessman Bhatta, whose financial and political links with the Shankar Group are under scrutiny.

Authorities said the probe could have far-reaching implications, with more than 40 companies under the group potentially affected. The conglomerate, which reports an annual turnover exceeding Rs 125 billion, employs over 15,000 people and has significant exposure to the banking sector, with loans estimated at around Rs 200 billion.

Founded in 1935, the Shankar Group grew from a textile trading business in Kathmandu into a major industrial house spanning steel, cement, insurance, hydropower, and trading sectors. Its flagship company, Jagdamba Steels, remains a dominant player in Nepal’s rebar market, accounting for a significant share of national production.

Investigators are also examining the group’s financial ties with Bhatta, including transactions flagged by Nepal Rastra Bank’s Financial Intelligence Unit between 2020 and 2022. Some of these transactions reportedly flowed into investments in Himalayan Reinsurance, a company jointly backed by the group and Bhatta.

The Department of Money Laundering Investigation (DMLI) had first initiated scrutiny into Bhatta in November 2022 following reports of suspicious financial transactions. The investigation, however, slowed under the previous administration before regaining momentum after recent political developments.

At the centre of the probe is a report by Nepal Rastra Bank’s Financial Information Unit, which flagged a Rs 450 million transfer in June 2021 to Bhatta’s personal account at Siddhartha Bank from Jagdamba Steel. The transaction was not reflected in the company’s audit report.

Investigators have also identified irregularities in overdraft accounts linked to Bhatta and Infinity Holdings, including unusually high-volume transactions that exceeded standard banking limits. Officials say preliminary findings indicate possible “layering” and “integration” of illicit funds, prompting a detailed investigation.

The probe is also examining Bhatta’s alleged role in influencing high-value public procurement deals, including supplies for security forces and involvement in the Budhi Gandaki Hydropower Project awarded without competitive bidding.

Authorities are further looking into alleged links with senior political figures and regulatory bodies, as the investigation expands to include other individuals.