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A Mumbai holiday court has remanded Hitesh Mehta, the general manager and head of accounts at New India Cooperative Bank, in police custody in connection with an alleged INR 122 crore misappropriation case. The fraud came to light during a Reserve Bank of India (RBI) audit. Mehta, who has confessed to withdrawing cash since the pandemic, is accused of diverting funds from the bank's Prabhadevi and Goregaon branches. The Mumbai police's Economic Offences Wing (EOW) has also arrested Dharmesh Paun, a private developer, and is searching for Unnanathan Arunachalam, an electrical contractor, for their involvement. The RBI has superseded the bank's board and appointed an administrator to oversee operations, marking the most significant crackdown on a cooperative bank since the PMC Bank scandal.
A Mumbai holiday court has remanded Hitesh Mehta, the ex-general manager and head of accounts at New India Cooperative Bank, in police custody in connection with an alleged misappropriation of funds. He will remain in custody until later this month. The case against him was registered shortly after the Reserve Bank of India (RBI) imposed restrictions on the bank due to alleged financial irregularities. The complaint was filed by the bank's chief executive officer, Devarshi Shishir Kumar Ghosh. Advertisement
According to an article published by Times of India, Mehta, aged 57, is accused of unlawfully withdrawing INR 122 crore from the lender's Prabhadevi and Goregaon branches. Reports indicate that he has allegedly confessed to the crime, stating that he had been diverting cash from the bank's safes since the pandemic. The fraudulent activities reportedly occurred between 2020 and 2025.
The issue surfaced earlier this week when an RBI audit team visited the New India Cooperative Bank's Prabhadevi head office. Mehta, as the head of accounts, and his team was responsible for filing TDS (Tax Deducted at Source), GST (Goods and Services Tax), and managing cash reserves. During the audit, when the bank's safe was counted, the RBI team discovered that INR 112 crore in cash was unaccounted for. Further investigation revealed missing funds from the bank's Goregaon branch, bringing the total missing amount to INR 122 crore.
Following the discovery, the bank's chief accounting officer, Devashish Ghosh, initiated an internal investigation to trace the missing funds. Later in the evening, Mehta met with the RBI officials and allegedly admitted to the crime. Consequently, a case was registered against him and his unknown associates under sections 316(5) (criminal breach of trust by a public servant) and 61(2) (criminal conspiracy) of the Bhartiya Nyaya Sanhita, 2023.
In addition, Mumbai police's Economic Offences Wing (EOW) has arrested Dharmesh Paun, a private developer from Kandivali, in connection with the case. Paun allegedly received INR 70 crore from Mehta to complete an SRA project in Charkop in Kandivali, a police official said. Mehta has allegedly transferred funds to another accused, Unnanathan Arunachalam, also known as Arunbhai, an electrical contractor.
The RBI has imposed restrictions prohibiting the bank from issuing new loans, making investments, borrowing funds, or permitting withdrawals for six months due to financial instability concerns. Furthermore, the RBI has superseded the bank's board of directors for a year, citing poor governance standards. To oversee the bank's affairs, the RBI has appointed Shreekant, a former chief general manager of the State Bank of India (SBI), as the administrator. Additionally, a committee of advisors has been established to support him.
As of March 2024, New India Cooperative Bank operates 30 branches with a deposit base of INR 2,436 crore. The bank reported losses of INR 22.78 crore in 2023-24 and INR 30.74 crore in 2022-23.
This incident marks the most significant action against a cooperative bank in Maharashtra since the collapse of the Punjab and Maharashtra Co-operative (PMC) Bank due to large-scale fraudulent loans. This case serves as a crucial reminder of the need for stringent regulatory oversight to prevent financial malpractice and ensure depositor confidence in the cooperative banking system.
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