New India Co-operative Bank: How a former GM was involved in ₹122-crore fraud — Explained

India’s central bank, the Reserve Bank of India (RBI), superseded the Maharashtra-based New India Co-operative Bank for the upcoming 12 months on Friday, February 14, after flagging concerns over poor governance standards and irregularities in its core lending operations.

A former general manager of the bank, Hitesh Pravinchand Mehta, was allegedly involved in siphoning ₹122 crore from the lender and was arrested a day after RBI’s intervention in the case. 

₹122 crore financial fraud

New India Co-operative Bank’s former general manager, Hitesh Pravinchand Mehta, who was also the bank’s head of accounts, was arrested on Saturday, February 15, for allegedly siphoning ₹122 crore from the lender.

The fraud allegedly occurred between 2020 and 2025 when the financial regulations were detected in the lender’s books. Mint reported earlier that an internal audit prompted a police investigation into the missing funds.

The general manager was accused of withdrawing large amounts of money by using his position as senior personnel. He was charged under the First Information Report (FIR) under sections 316 (5) and 61 (2) of the BNS (Banking and Non-banking Services). 

India’s Economic Offences Wing (EOW) of the Mumbai police questioned Mehta for over three hours on Saturday. According to a Hindustan Times report, Mehta was allegedly siphoning money to transfer cash between the Prabhadevi and Goregaon branches in Mumbai.

According to multiple media reports, the police investigation revealed that the funds had been misappropriated after the global COVID-19 pandemic broke. The ₹112 crore was siphoned from the treasury safe in Prabhadevi and ₹10 crore from the Goregaon branch.

This cooperative bank fraud is an ongoing development. On February 21, the news portal Hindustan Times reported, citing an official aware of the development, that the former chief executive officer (CEO) of the New India Co-Operative Bank, Abhimanyu Bhoan, and real estate developer Dharmesh Paun were arrested on Friday on the grounds of alleged involvement in the money embezzlement case. 

The three arrested will be under the EOW custody till February 28, reported the news agency PTI on Friday. 

RBI Action

RBI’s first move was to stop the account holders and depositors from withdrawing money for the next six months. The central bank also appointed Shreekant, the ex-chief general manager (CGM) of the State Bank of India, as an administrator to help revive the institutional lender and manage its operations.

The central bank has also created a ‘Committee of Advisors’ to assist Shreekant in carrying out his allotted responsibilities.

The Reserve Bank of India imposed restrictions on the cooperative bank on February 13, mandating that the bank cannot accept or withdraw funds from its savings, current, or other deposit accounts. 

After the six-month freeze, the operations will be up for review to consider the removal of the restrictions on the lender.

As RBI imposed restrictions on the institutional lender, hundreds of account holders rushed to New India Co-operative Bank’s Mira Road branch, trying to withdraw cash from their accounts.

This turnout of banking customers made the authorities deploy more police protection to confront the crowd. As the operations were halted, the customers were waiting in long queues outside the branch, wanting to speak to the relevant authorities about the next steps on February 14.