MUMBAI: The Economic Offences Wing (EOW) of the Mumbai Police arrested Hitesh Praveenchand Mehta, a former General Manager and Head of Accounts at the now-defunct New India Cooperative Bank, late on Saturday evening.
Mehta has been accused of embezzling a staggering Rs 122 crore from the bank’s treasury between 2020 and 2025, spanning across two key branches. Mehta will be presented before a court on Sunday for judicial custody.
The arrest came after an FIR was filed by the Dadar Police earlier that day. The case was later transferred to the EOW, which raided Mehta’s residence and seized certain documents.
Mehta was taken into custody after being summoned to record his statement before the EOW at the Crawford Market office in south Mumbai, in connection with the case against him and others.
Based on a complaint filed by the bank’s now-sacked CEO, Devarshi Ghosh, a case was registered at the Dadar Police Station.
The case was subsequently transferred to the EOW for further investigation. The EOW has discovered that the misappropriation of funds began soon after the onset of the pandemic.
The embezzled funds include Rs 112 crore, which was kept in the safe at the Prabhadevi branch, and Rs 10 crore from the Goregaon branch.
In his complaint, Ghosh alleged that Mehta withdrew Rs 122 crore from the treasury of the Dadar and Goregaon branches. Mehta was responsible for overseeing these branches during his tenure. The fraud allegedly occurred between 2020 and 2025, as Mehta was expected to retire in 2026.
Mehta is being represented by lawyer Chandrakant Ambani, who claims that his client is being framed.
On Friday, the Reserve Bank of India (RBI) sacked the board of the cooperative bank and placed it under an administrator for the next year.
The RBI also banned the bank from lending and collecting deposits while allowing depositors to withdraw money for the next six months, effective Thursday.
As part of the action, the RBI appointed Shreekant, a former Chief General Manager at the State Bank of India, as the administrator to manage the bank's affairs.
A two-member advisory committee, consisting of Ravindra Sapra (a former general manager at SBI) and chartered accountant Abhijeet Deshmukh, will assist the administrator in carrying out his duties.
The RBI’s intervention followed concerns about poor governance practices observed at the bank. As of March 2024, New India Cooperative Bank had approximately 1,30,000 depositors with an outstanding balance of Rs 2,436 crore.
This was an increase from Rs 2,406 crore the previous year, despite the bank reporting losses for the past two fiscal years. In FY24, its losses rose to Rs 33 crore, compared to Rs 22.8 crore in the previous year. The bank’s advances decreased to Rs 1,175 crore from Rs 1,330 crore during this period.
Despite the six-month withdrawal ban, the RBI assured depositors that their money, up to Rs 5 lakh, is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). As much as 90% of the bank’s depositors are eligible for this guarantee, as their deposits are under Rs 5 lakh.
New India Cooperative Bank operates 30 branches, with a deposit base of Rs 2,436 crore from around 1,30,000 customers as of March 2024. The bank reported losses of Rs 22.78 crore in 2023-24 and Rs 30.74 crore in 2022-23.
This marks the first major action against a cooperative bank in Maharashtra since the collapse of the Punjab and Maharashtra Co-operative (PMC) Bank in September 2019 due to large-scale fraudulent loans.
Following that scam, the RBI instructed an NBFC run by the Centrum Group to take over PMC, which was later renamed Unity Small Finance Bank.
At the time of its collapse, PMC had over Rs 11,600 crore in liabilities after it was found that the bank had engaged in fraudulent lending practices. Around 70% of PMC’s Rs 8,380 crore loan book was tied up with one real estate firm, HDIL, which also went bankrupt.