Pappu Construction operator Hari Narayan Rauniyar has been arrested on Friday.
A team deployed from the Metropolitan Police Circle, Baneshwor nabbed Rauniyar, also the former lawmaker, from Chhetrapati area this afternoon.
A fraud case was filed against him in Banke.
Earlier, Banke police had sent a letter to the Metropolitan Police Circle, Baneshwor asking the latter to apprehend Rauniyar.
Preparations are underway to take him to Banke, police said.