Mumbai: For the past five days, depositors have been lining up outside the branches of the Mumbai-based New India Cooperative Bank, anxious about their savings. The Reserve Bank of India (RBI) superseded the bank’s board last week and imposed restrictions on its functioning, alleging embezzlement of Rs 122 crore.
These anxious depositors are being met with closed shutters and a notice from the bank stating that their money is insured and safe and will be repaid—up to Rs 5 lakh per depositor—within 90 days of the notice.
The scenes are reminiscent of 2019 when depositors of the Punjab and Maharashtra Cooperative Bank scrambled to retrieve their money after the RBI imposed similar restrictions, alleging financial misrepresentation.
Mumbai Police’s Economic Offences Wing (EOW) is investigating the New India Cooperative Bank case and has so far arrested two individuals: Hitesh Mehta, the bank’s former general manager and head of accounts, and Dharnesh Paun, who allegedly assisted Mehta in routing the money through his company.
In a statement on 13 February, the RBI announced that it had prohibited the bank from granting loans or advances, making investments, accepting fresh deposits, or disbursing any payments, whether concerning its liabilities or otherwise. Withdrawals from savings or current accounts have also been barred due to the bank’s liquidity position. These restrictions will remain in force for six months.
Vishwas Utagi, founder of the Bank Depositors Protection & Welfare Society, told ThePrint that the New India Cooperative Bank has approximately two lakh depositors and branches in Mumbai, Thane, Pune, Surat, and Baroda.
“The depositors are allowed to operate their lockers, but as far as their money is concerned, apart from the notice, nobody is addressing them. That’s the sad story,” said Utagi, who served as the secretary of the All India Bank Employees Association until 2017.
Utagi further noted that the RBI usually reimburses depositors within 90 days of a bank’s liquidation. However, in this case, it has promised to return the money within 90 days of imposing restrictions.
According to its latest available annual report for 2023-24, the New India Cooperative Bank operates 28 branches and had total deposits of Rs 2,436.37 crore as of 31 March 2024. The bank posted a loss of Rs 22.77 crore for the fiscal year ending 2024.
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How the case came to light
According to the FIR lodged on the complaint of Devarshi Ghosh, now acting CEO of the New India Cooperative Bank, at Mumbai Police’s Dadar police station, the alleged financial irregularities were discovered during a routine RBI inspection on 12 February.
RBI officials visited the bank’s head office in Prabhadevi and a branch office in Goregaon. According to the FIR, which ThePrint has seen, the Prabhadevi office is a six-storey building, with the bank’s treasury—where cash is stored—located on one of the floors. Similarly, the Goregaon branch has a treasury with a cash cell on the first floor.
The FIR states that the complainant heard that Hitesh Mehta, who oversaw the bank’s cash, accounts, and taxation (including Goods and Services Tax and Tax Deducted at Source), was present in the office during the RBI inspection.
Upon surveying the cash at the Prabhadevi office and attempting to reconcile it with the cash register, RBI officials discovered a shortfall of Rs 112 crore. Similarly, at the Goregaon office, they found a further mismatch of Rs 10 crore between the actual cash and recorded amounts.
According to the FIR, Mehta went to the fifth floor of the Prabhadevi office and, in the presence of several cooperative bank employees, including Ghosh, confessed to handing over Rs 122 crore to his acquaintances. He admitted to taking the cash in increments since the Covid-19 pandemic. RBI officials recorded his confession on their phone. Following this, Mehta also provided a written confession to the RBI, as noted in the FIR. Another unnamed accused is mentioned in the FIR for allegedly assisting Mehta in the operation.
The EOW investigation
Mumbai Police’s EOW arrested Mehta on Saturday evening following a raid at his residence in Dahisar. During initial questioning, Mehta informed investigators that he had given Rs 70 crore to Paun, a developer who invested it in a slum rehabilitation project in Charkop. However, according to Paun’s statement, the amount was significantly lower, an official familiar with the investigation told ThePrint.
Additionally, some money was given to Unnanathan Arunachalam, a solar panel businessman based in Malwani, who is reportedly absconding.
The Mumbai Police’s EOW has custody of Mehta and Paun until 21 February.
Nishit Mishra, Joint CP, EOW, did not respond to ThePrint’s call.
(Edited by Radifah Kabir)
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