Ishwori Basnet, mastermind of the crime, had served as sergeant in the Armed Police Force for four years before abandoning the force. He was working as a contractor in the Chitawan district as of late.
The five-member gang tried to extort five million Nepalese rupees and also issued death threats to a local businessman of Chitawan district pretending to be agents of Indian Intelligence Agency RAW, police said.
They were arrested from a guest house in Kathmandu, police said.
Police have also recovered three sets of mobile phone from them.
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