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New India Co-operative Bank fraud: Mumbai Police arrests ex-GM for siphoning ₹122 crore amid RBI curbs
- New India Co-operative Bank fraud: Mumbai Police arrested the former general manager Hitesh Mehta of the bank for allegedly siphoning ₹122 crore from Treasury funds
New India Co-operative Bank fraud: The Mumbai police arrested Hitesh Pravinchand Mehta, former General Manager and Head of Accounts of the New India Cooperative Bank, for allegedly siphoning ₹122 crore from the lender. Mehta was arrested by the Economic Offences Wing (EOW) of the Mumbai police after being questioned for more than three hours on February 15.
The ex-GM was called to record his statement before the probe agency at its south Mumbai office concerning the case registered against him and others. Mehta will be produced before a local court on Sunday. On Friday, the Reserve Bank of India (RBI) superseded the cooperative bank's board for 12 months and appointed an administrator to manage its ongoing affairs.
A day before that, the central bank imposed several restrictions on the lender to protect the interests of its depositors, including on depositors' withdrawal of funds, due to supervisory concerns emanating from the recent material developments in the bank and lending irregularities during inspections.
New India Co-operative Bank fraud: Mumbai Police arrests ex-GM Hitesh Mehta
According to police, Mehta is accused of misappropriating funds while overseeing the bank's Dadar and Goregaon branches in Mumbai. The fraud, which allegedly occurred between 2020 and 2025, was detected when discrepancies appeared in the bank's financial records. An internal audit flagged concerns over missing funds, prompting a police investigation.
According to the complaint filed by the Chief Accounts Officer of New India Co-operative Bank at the Dadar Police Station, the bank's ex-GM Hitesh Mehta, in his capacity as General Manager, is accused of withdrawing a massive sum from the bank's accounts, taking advantage of his position.
The police mentioned that the investigation was initially conducted by the Dadar Police, who have since registered a First Information Report (FIR) under sections 316 (5) and 61 (2) of the BNS (Banking and Non-banking Services).
The EOW has since seized the details of the bank's books, which will undergo forensic auditing to ascertain the full scale of the fraud and determine the involvement of other individuals, if any. Earlier today, the Mumbai Police's EOW started investigating the irregularities in the New India Cooperative Bank.
On Friday, the bank's acting Chief Executive Officer, Devarshi Ghosh, lodged a complaint against Mehta and others at the Dadar police station in central Mumbai for allegedly misappropriating the bank's funds. Based on the complaint, the police registered a case early on Saturday morning, which was then transferred to the EOW for an in-depth investigation.
According to the complaint, Mehta and his other associates hatched a conspiracy and embezzled ₹122 crore from the safes of Prabhadevi and Goregaon bank offices. A case under the Banking and Non-banking Services (BNS) sections 316 (5) (criminal breach of trust by public servants, bankers, and others in positions of trust), 61(2) (criminal conspiracy) was registered
During the police investigation, it became clear that the funds had been misappropriated soon after the COVID-19 pandemic broke out. While the accused embezzled ₹112 crore from the Treasury safe in Prabhadevi, ₹10 crore was siphoned off from the Goregaon branch.
Also Read: RBI cancels March 31 bank holiday: PSBs, private banks to stay open for fiscal-end closures
RBI's action against New India Co-operative Bank
On February 14, the RBI superseded the board of Maharashtra-based New India Co-operative Bank for 12 months, one day after imposing several restrictions due to poor governance standards and irregularities in its lending business. The RBI barred account holders and depositors from withdrawing money from the lender for six months.
The RBI's action against the bank triggered panic among customers, who thronged its branches, hoping to access their funds. The RBI appointed Shreekant, a former Chief General Manager of the State Bank of India (SBI), as the administrator to manage the affairs of New India Co-operative Bank. It also appointed a 'Committee of Advisors' to assist him in discharging his duties.
The members of the Committee of Advisors are Ravindra Sapra (former General Manager, SBI) and Abhijeet Deshmukh (Chartered Accountant). The action was necessitated "due to certain material concerns emanating from poor governance standards observed" in the Mumbai-headquartered bank.
On Thursday, the RBI prohibited the bank from issuing new loans and suspended deposit withdrawals and superseded the bank's board for mismanagement on Friday. The restrictions came into force at the close of business on Thursday, will remain in force for six months, and are subject to review.
"Considering the bank's present liquidity position, the bank is directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor," the RBI said while imposing restrictions.
However, the lender can set off loans against deposits subject to the conditions stated in the RBI directions. It may also incur expenditures on certain essential items such as employee salaries, rent, and electricity bills.
The RBI said that as of the close of business on February 13, the bank shall not, without prior approval, grant or renew any loans and advances, make any investment, or incur any liability, including acceptance of fresh deposits. The directions were necessitated due to supervisory concerns emanating from the recent developments in the bank and to protect the interest of bank depositors.
According to reports, over 90 per cent of the city-based bank's 1.3 lakh depositors have up to ₹5 lakh in their accounts and can get their entire money through deposit insurance. The bank's chief compliance officer approached the Mumbai Police's EOW on Thursday after discovering some lapses in RBI's 'spot inspection' of its books.
As of March 2024, the bank had 28 branches. Its overall assets decreased to ₹1,175 crore from the year-ago period's ₹1,330 crore, and the gross non-performing assets ratio increased to nearly 7.96 per cent as of March 31, 2024. Most of the bank's 28 branches are located in the Mumbai megapolis, and it also has two branches at Surat in neighbouring Gujarat and one in Pune.
The overall deposit base increased marginally to ₹2,436 crore at the end of FY24 from ₹2,406 crore in the year-ago period. According to the bank's annual report, over two-thirds of the deposits are term deposits. The bank was started in 1968 by a state-run general insurer staffers with a similar name.
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Business NewsIndustryBankingNew India Co-operative Bank fraud: Mumbai Police arrests ex-GM for siphoning ₹122 crore amid RBI curbs
First Published:15 Feb 2025, 03:25 PM IST
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