KKN Gurugram Desk | In a major financial fraud case, Mumbai Police has arrested Hitesh Mehta, the General Manager of New India Cooperative Bank, for allegedly embezzling ₹122 crore. The Economic Offences Wing (EOW) of the police detained Mehta after questioning him for over three hours. This arrest follows a formal complaint by the bank’s Acting Chief Executive Officer, Devarshi Ghosh, who reported the financial misconduct to Dadar Police Station on Friday.

This incident has further deepened the troubles for New India Cooperative Bank, which was already under the Reserve Bank of India (RBI) restrictions. The RBI had imposed several financial limitations on the bank, including a withdrawal cap for depositors, citing supervisory concerns.

Details of the ₹122 Crore Embezzlement Case

According to the official complaint, Mehta conspired with other associates to misappropriate ₹122 crore from the bank’s vaults in its Prabhadevi and Goregaon offices. The funds, which were supposed to be securely held in the bank’s treasury, were allegedly siphoned off through fraudulent transactions.

The fraudulent activity was discovered during an internal audit, prompting bank officials to file a case against Mehta and other involved individuals.

Interrogation and Arrest of Hitesh Mehta

Hitesh Mehta was summoned to the South Mumbai office of the investigation agency to record his statement regarding the case. After extensive questioning, the Economic Offences Wing (EOW) found inconsistencies in his responses and subsequently arrested him.

A senior police officer confirmed that Mehta will be produced before a local court on Sunday, where further legal proceedings will take place. The police have also initiated a deeper investigation to identify all individuals linked to this financial fraud.

Charges Filed Against Mehta and Others

Based on the complaint, the Mumbai Police have registered a case against Mehta and his associates under multiple sections of the Indian Penal Code (IPC), including:

• Section 316(5) – Criminal breach of trust by public servants, bankers, or individuals in positions of trust.
• Section 61(2) – Criminal conspiracy.

Given the magnitude of the financial misappropriation, the case has now been transferred to the Economic Offences Wing (EOW) for further investigation.

RBI’s Restrictions on New India Cooperative Bank

The Reserve Bank of India (RBI) had already imposed strict financial restrictions on the bank before this fraud case came to light. These restrictions were put in place due to concerns over the bank’s financial stability and regulatory compliance.

Some of the key RBI-imposed restrictions include:

• Withdrawal Cap on Depositors: Customers were restricted from withdrawing large sums of money due to liquidity concerns.
• Dissolution of the Bank’s Board: The RBI dissolved the existing board of directors and took direct control over the bank’s management.
• Appointment of an Administrator: A new administrator was appointed to oversee financial operations, ensuring compliance with regulatory norms.
• Formation of an Advisory Committee: A panel of financial experts was set up to guide the bank’s restructuring and recovery process.

Why Did the RBI Impose These Restrictions?

The RBI’s action was driven by severe financial irregularities and governance failures within the bank. Recent developments raised serious concerns about the bank’s ability to function efficiently, prompting the RBI to intervene.

Banking experts suggest that the fraud committed by Mehta may have been one of the major reasons behind the RBI’s decision to enforce strict oversight.

Impact of the Fraud on Bank Customers and Stakeholders

This scandal has created significant uncertainty for the bank’s customers, many of whom were already facing difficulties due to restricted withdrawals. The embezzlement of ₹122 crore has worsened the financial crisis of the cooperative bank, leading to fears of deposit losses and long-term instability.

Many account holders and investors are now demanding stricter actions against those responsible and seeking assurances regarding the safety of their deposits.

Legal and Financial Consequences for the Bank

• Possible License Cancellation: If further irregularities are found, the RBI may cancel the bank’s operating license, pushing it toward liquidation or merger with another financial institution.
• Financial Compensation for Depositors: If the bank fails to recover the misappropriated funds, depositors may have to rely on insurance protections under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
• Legal Proceedings Against the Accused: The accused individuals, including Mehta, could face long-term imprisonment and heavy penalties if found guilty.

New India Cooperative Bank: An Overview

New India Cooperative Bank operates 28 branches across India, with most of them located in the Mumbai Metropolitan Region. The bank also has two branches in Surat, Gujarat, and one in Pune, Maharashtra.

The financial institution was once considered a trusted cooperative bank, serving thousands of account holders. However, governance failures, financial mismanagement, and fraudulent activities have severely impacted its reputation.

What’s Next? The Investigation Continues

The Economic Offences Wing (EOW) is now conducting an in-depth forensic audit of the bank’s financial records. Investigators are also looking into possible collusion among senior officials, as a fraud of this scale could not have been carried out by a single person.

Authorities will also investigate whether any external entities, including businessmen or political figures, were involved in this large-scale financial misconduct.

Preventive Measures to Avoid Such Banking Frauds in the Future

Banking fraud cases like this highlight the importance of stronger regulatory frameworks and better monitoring systems. Experts suggest several measures that could prevent such frauds in cooperative banks:

1. Stronger Internal Audits: Regular financial audits should be conducted to detect fraud at an early stage.
2. Technology-Based Security Systems: Banks should adopt advanced AI-based fraud detection mechanisms.
3. Strict Governance Policies: Transparent governance practices and stricter compliance norms must be implemented.
4. Whistleblower Protection Mechanisms: Employees should be encouraged to report suspicious activities without fear of retaliation.
5. Frequent RBI Inspections: The RBI should conduct periodic inspections of cooperative banks to assess their financial health.

The arrest of Hitesh Mehta in the ₹122 crore embezzlement case is one of the biggest financial frauds to hit India’s cooperative banking sector. While authorities have acted swiftly, the incident has raised serious questions about financial governance, customer security, and regulatory oversight.

With banking frauds on the rise, it is crucial for authorities, financial institutions, and depositors to remain vigilant. The ongoing investigation will determine the full extent of the fraud and whether more individuals were involved in this large-scale financial scam.

As the case unfolds, New India Cooperative Bank customers and stakeholders eagerly await further updates, hoping for a resolution that ensures financial stability and justice for those affected.