Manihar, who was held in Rupadiha, is the son of Majid Manihar, a close lieutenant of slain Nepali mafia don turned MP Mirza Dilshad Beg.

'Even though Vicky Manihar was found in possession of just Rs.5,000, he was suspected to be among the kingpins of the racket in fake Indian currency believed to be manufactured in Pakistan and routed into India via Kathmandu,' the Uttar Pradesh police officer said.

According to him, 'the diaries recovered from the arrested persons also contain vital information establishing their connection with some influential persons in Nepal including some family members of king Gyanendra'.

Police believe that fake Indian currency printed in Pakistan was transported to Kathmandu by air and then spread across India through the highly porous 600-km long border along Uttar Pradesh and Bihar.