The pension records of Nepali soldiers who died fighting in the Indian army are mismanaged and there is much bungling in the distribution of pensions. In fact, money is siphoned off. According to sources at the foreign ministry, as names, address and their verification are often inaccurate, a lot of the money does not reach the people it is supposed to, but remains instead with the Indian Embassy. The Indian Embassy has not released the names or even the number of Nepali soldiers who have died fighting for the Indian government. Sources say that in order to be employed by the Indian army, many Nepali youth lie their age, name and place of residence. Since Bahuns are not enlisted into the Indian army, they also lie about their caste. This has been a practice since the days of Rana rule. It is when these people are killed in battle or die while on duty that the trouble starts. Since they have have lied about their identities, their bodies cannot be identified and their families do not get the money that is their due. According to sources, there may be as many as 4,000 people that have lied their identities but are still serving the Indian army.

These problems grew in magnitude under King Mahendra's reign, and so he set up the Gorkha Recruitment and Pension Unit under the foreign ministry. The main duty of this unit was to keep proper records of all Nepali soldiers killed on duty in the Indian army and to collect their pension payments from the Indian government for proper distribution to their families. But India did not let this unit function. The Indian side threatened that if Nepali authorities began distributing pensions, they would close all pension offices in Nepal and the Nepali authorities would have collect to the money from Gorakhpur, India. Today there are no signs of whether that the foreign ministry is aware of the unit or not, and no paperwork on it exists.