KATHMANDU – Amidst a deepening crisis within the Rastriya Swatantra Party (RSP), prominent lawmaker and former Education Minister Sumana Shrestha resigned from her position as the party's Joint General Secretary today. Her resignation comes as RSP Chairman Rabi Lamichhane remains imprisoned over cooperative fraud charges, fueling intense speculation about the party's future and the potential formation of a new political front involving Shrestha, RSP Vice President Swarnim Wagle, and Kathmandu Mayor Balendra Shah.

Ms. Shrestha, who was appointed Joint General Secretary in December 2023, formally submitted her resignation, citing a desire to focus more intensely on her responsibilities as a Member of Parliament. Sources within the RSP secretariat indicated she felt the party's role in Parliament needed strengthening and wished to dedicate her efforts there.

This significant move occurs against the backdrop of RSP Chairman Lamichhane's ongoing legal battle. Lamichhane, a former Deputy Prime Minister and Home Minister, was arrested on April 5, 2025, after the Tulsipur High Court overturned a previous district court order granting him bail in a major cooperative fraud case. He is currently being held in custody in Rupandehi, facing charges related to the alleged misappropriation of millions of rupees channeled into Gorkha Media Network, where he was previously Managing Director. The Supreme Court is currently reviewing a petition challenging his detention.

Lamichhane's imprisonment has sent shockwaves through the RSP, a party that emerged rapidly as the fourth-largest force in the last general election, capitalizing on public frustration with established political parties. Now, sources suggest this crisis could be a catalyst for a major internal realignment.

According to credible sources cited in initial reports, approximately one month ago, Swarnim Wagle and Sumana Shrestha held confidential discussions with Balendra Shah, the popular and independent Mayor of Kathmandu. The alleged purpose of this meeting was to explore the formation of a new political party, potentially targeting upcoming elections. It is speculated that Lamichhane's escalating ethical and legal issues related to the cooperative scam could be leveraged by figures like Wagle and Shrestha as justification for breaking away and forging a new path.

All three individuals – Wagle, a respected economist and former National Planning Commission Vice-Chair; Shrestha, known for her articulate parliamentary presence; and Shah, a former rapper who won the Kathmandu mayorship as an independent – are widely perceived to harbour significant political ambitions. Mayor Shah, known for his unconventional style and sometimes radical statements on social media, is already a significant independent political force, making the prospect of him leading or joining a new party seem plausible to observers.

The convergence of Shrestha's resignation from her party post, Lamichhane's imprisonment, and the reported discussions involving Wagle and Shah points towards potential fragmentation within the RSP. Analysts suggest that these internal pressures, coupled with pre-existing concerns about the party's ideological clarity and internal democracy, could lead to significant divisions within the RSP before the end of the current House of Representatives' tenure.

While the formation of a new party remains speculative at this stage, the confirmed resignation of Ms. Shrestha and the jailing of Mr. Lamichhane represent undeniable turmoil for the Rastriya Swatantra Party. The coming weeks and months will be critical in determining whether the RSP can navigate this crisis or if these events signal the beginning of its splintering and the rise of new political configurations in Nepal.