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Journalism of Courage
The Economic Offence Wing (EOW) of the Mumbai Police last week arrested Hitesh Mehta, former general manager and head of accounts at the city-based New India Cooperative Bank, for allegedly siphoning Rs 122 crore from the bank’s safe. A developer, Dharmesh Paun, has also been arrested for allegedly assisting Mehta in routing the embezzled money.
The Reserve Bank of India (RBI) then restricted withdrawals from the bank, leading to depositors queueing up for their money.
The fraud involved the disappearance of a significant amount of cash from the bank. During an RBI inspection on February 12, officials discovered discrepancies in the bank’s cash records. Specifically, Rs 112 crore was found missing from the Prabhadevi branch safe, and an additional Rs 10 crore was missing from the Goregaon branch’s safe.
Upon investigation, Hitesh Mehta came under the scanner for allegedly stealing the money over six years, between 2019 and 2025.
Who are the key individuals involved in the fraud?
Hitesh Mehta was responsible for handling the cash at the Prabhadevi and Goregaon branches. Mehta has confessed to stealing the money. He has further admitted to taking cash from both branches and handing it over to Dharmesh Paun, who allegedly helped him in routing the money through his company. While Mehta and Paun have been arrested, another suspect yet to be arrested is Unnanathan Arunachalam, who is also believed to have helped in misappropriating the funds.
How was the fraud discovered and investigated?
After the RBI officials discovered the missing cash, senior bank officials were questioned, and Mehta confessed.
Mehta then took the RBI and bank officials to different locations and handed over Rs 50 lakh of the stolen money. He promised to return the rest too.
Mehta recorded his confession on video. A case was filed at the Dadar police station and the investigation handed over to the EOW.
What are the sections invoked?
The FIR was filed under sections 316(5) (criminal breach of trust by a public servant or banker, merchant, broker, attorney or agent) and 61(2) (criminal conspiracy) of the Bharatiya Nyaya Sanhita (BNS).
What action has the RBI taken?
The RBI has imposed restrictions on the bank due to concerns over its financial stability. These restrictions include prohibiting the bank from issuing new loans, making investments, borrowing funds, or allowing withdrawals for a period of six months, starting from the close of business on February 13.
Additionally, the RBI has superseded the bank’s board of directors for a 12-month period due to “poor governance standards.” The RBI has appointed Shreekant, a former chief general manager of the State Bank of India, as the administrator to manage the bank’s affairs, assisted by a committee of advisors.
The restrictions also prevent the bank from granting or renewing loans, making investments, incurring liabilities, accepting fresh deposits, or disbursing payments without written approval from the RBI.
What is the record of the bank?
New India Cooperative Bank had a network of 30 branches and a deposit base of Rs 2,436 crore as of March 2024. The bank had posted losses of Rs 22.78 crore in 2023-24 and Rs 30.74 crore in 2022-23.
Is this the first time that the RBI has imposed restrictions on a cooperative bank in Maharashtra?
No. A similar thing happened with the Punjab and Maharashtra Co-operative (PMC) Bank, which faced action due to large-scale fraudulent loans.
On September 23, 2019, the RBI imposed restrictions on PMC Bank, preventing around 17 lakh depositors from withdrawing money from its 137 branches across six states.
Probe revealed that the bank had unlawfully sanctioned around 73% of its loans to the Housing Development Infrastructure Ltd (HDIL) group of companies, favouring its promoters, Rakesh Wadhawan and his son Sarang. The bank allegedly concealed HDIL’s non-performing assets from the RBI. The EOW arrested over 15 people in the case, including the bank’s top management.
