A security personnel keeps vigil at a deserted New India Cooperative Bank, in Mumbai, on February 15, 2025. After imposing business restrictions on the bank, the Reserve Bank on Friday superseded the lender’s board citing governance lapses and appointed an administrator to revive it
| Photo Credit: PTI
The Mumbai police on Saturday (February 15, 2025) arrested Hitesh Mehta, General Manager and Head of Accounts of the New India Cooperative Bank, for allegedly misappropriating ₹122 crore from the bank, officials said.
Mr. Mehta was placed under arrest by the Economic Offences Wing (EOW) of the city police after being questioned for more than three hours, an official said. Mr. Mehta will be produced before a local court on Sunday, the police official added.
The police move comes a day after the Mumbai based-New India Cooperative Bank’s board was superseded by the Reserve Bank of India (RBI) for lack of liquidity. The RBI on Friday superseded the cooperative bank’s board for a year and appointed an administrator to manage its affairs. A day prior to that, it imposed several restrictions, including on withdrawal of funds by depositors, citing supervisory concerns emanating from the recent material developments in the bank, and to protect the interest of its depositors.
As per the complaint, Mr. Mehta along with other associates misappropriated ₹122 crore from the safes of Prabhadevi and Goregaon offices of the bank. “The above accused and his accomplices, in their capacity as General Manager and Head Accounts of the bank, committed criminal breach of trust and misappropriated the amount of about ₹122 crores of the bank’s cash kept in trust in the safe deposit boxes of the Prabhadevi and Goregaon offices. Therefore, a case was registered on the complaint of the complainant,” Dadar police said in a statement.
A case under the Bharatiya Nyaya Sanhita (BNS) sections 316 (5) (criminal breach of trust by public servants, bankers, and others in positions of trust), 61(2) (criminal conspiracy) has been registered.
During the investigation, it came to light that the misappropriation of the funds had started soon after the COVID-19 pandemic broke out. The accused allegedly embezzled ₹112 crore from the safe in Prabhadevi, while ₹10 crore were siphoned off from the Goregaon branch, police officials said.
“As Mehta’s involvement in the crime came to the fore, the EOW placed him under arrest,” the official said.
The New India Cooperative Bank has 28 branches and most of them are located in Mumbai, while two are in Surat in neighbouring Gujarat and one in Pune.
A three-member committee headed by Former State Bank of India Chief General Manager Shreekant has been appointed to manage the affairs of the bank for the present. The RBI will manage the bank’s board for 12 months, according to a statement from the banking watchdog, adding that the customers can claim deposit insurance of up to ₹5 lakh.
Acting Chief Executive Officer of the bank, Devarshi Ghosh, on Friday lodged a complaint against Mr. Mehta and others at the Dadar police station in central Mumbai for alleged misappropriation of the bank’s funds, the police said.
“Based on the complaint, the police registered a case in the wee hours of Saturday, which was then transferred to the EOW for investigation,” another official said.
The RBI directed the bank to not issue fresh loans, nor to accept deposits, and has prohibited customers from making withdrawals. Administrative operations like paying salaries to staff and payment of utility expenses can continue, the RBI added.
Customers, however, thronged branches of the bank in hopes of making withdrawals in light of fresh developments.
According to the information on its website, the New India Cooperative Bank was founded in 1968 modelled on the lines of the German Labour Bank. It was initially called the Bombay Labour Cooperative bank, and was started with the support of trade unionist leader and a former Defence Minister George Fernandes. The bank website also mentions Ranjit Bhanu, “a noted criminal lawyer, trade unionist and an MLA”, as being a co-founder.
The bank began with 555 members and a share capital of ₹1 lakh. According to its Annual Report, as on March 31, 2024, the number of regular members of the bank was 6,866 and nominal members was 2,173. The bank has been in losses for the past two years, posting a loss of ₹22.77 crore in 2023-24. The bank had a capital adequacy ratio of 9.06% against the RBI mandate of 10%.
The bank’s liquidity crunch and a subsequent allegations of financial misappropriation by employees also attracted political reactions. “It is worrying to see this happen to any bank. The poor’s hard earned money is deposited in the bank gets frozen,” Member of Parliament Supriya Sule said assuring that she would take it up with Finance Minister Nirmala Sitharaman and the Minister of Cooperation Amit Shah.
Published – February 15, 2025 12:54 pm IST
