Mumbai court orders detention amid ₹122 crore embezzlement investigation
In a significant development concerning the New India Cooperative Bank (NICB) fraud case, a Mumbai court has remanded Hitesh Mehta, the bank’s former General Manager and Head of Accounts, along with co-accused Dharmesh Paun, to police custody until February 21, 2025. The duo faces allegations of misappropriating ₹122 crore from the bank’s funds.
Unveiling the Fraud
The case came to light when Devarshi Ghosh, the acting Chief Executive Officer of New India Cooperative Bank, lodged a complaint at Dadar police station on February 14, 2025. The complaint alleged that Mehta and his associates conspired to divert substantial funds from the bank’s Prabhadevi and Goregaon branches. Following the registration of the First Information Report (FIR) in the early hours of February 15, the investigation was transferred to the Economic Offences Wing (EOW) of the Mumbai Police due to the magnitude of the alleged scam.
Modus Operandi
Preliminary investigations suggest that the fraudulent activities spanned a five-year period, from 2020 to 2025. During this time, Mehta, leveraging his position as General Manager and Head of Accounts, allegedly orchestrated unauthorized transfers of funds between branches. He is accused of embezzling ₹112 crore from the Prabhadevi branch and an additional ₹10 crore from the Goregaon branch. The discrepancies were first detected during an internal audit, which revealed significant shortfalls in the bank’s accounts.
Legal Proceedings
Upon their arrest, Mehta and Paun were presented before a holiday court in Mumbai on February 16. The court granted the EOW’s request for police custody until February 21 to facilitate further investigation into the complex financial transactions and to trace the misappropriated funds. The accused have been charged under sections 316(5) (criminal breach of trust by bankers and public servants) and 61(2) (criminal conspiracy) of the Bharatiya Nyay Sanhita (BNS).
Regulatory Intervention
In response to the unfolding scandal, the Reserve Bank of India (RBI) has taken decisive actions to safeguard the interests of the bank’s depositors and maintain financial stability:
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Board Supersession: The RBI has superseded the bank’s board of directors for a period of one year, appointing an administrator to oversee its operations.
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Operational Restrictions: The central bank has imposed restrictions on the bank’s activities, including limitations on withdrawals and a prohibition on granting or renewing loans and advances without prior approval. These measures aim to prevent further financial irregularities and protect depositor interests.
Impact on Depositors
The RBI’s restrictions have led to considerable concern among the bank’s customers. On February 15, numerous depositors reportedly queued up outside various branches, seeking information about the safety of their funds and the possibility of withdrawals. The imposed limitations have temporarily restricted access to deposits, causing distress among account holders who rely on these funds for personal and business needs.
Ongoing Investigation
The EOW is conducting a thorough investigation to uncover the full extent of the fraud and identify any additional individuals who may be involved. Forensic audits of the bank’s financial records are underway to trace the flow of the misappropriated funds and to determine whether similar fraudulent activities have occurred in other branches. The authorities are also examining the bank’s internal controls and auditing processes to identify lapses that may have allowed the fraud to persist undetected for several years.
Looking Ahead
The New India Cooperative Bank fraud case underscores the critical importance of robust internal controls, regular audits, and vigilant regulatory oversight in the banking sector. As the investigation progresses, it is anticipated that further details will emerge, potentially leading to additional arrests and legal actions. In the interim, the RBI and the appointed administrator are expected to implement measures to restore depositor confidence, ensure the bank’s financial health, and prevent the recurrence of such fraudulent activities in the future.
In conclusion, the arrest and remand of Hitesh Mehta and Dharmesh Paun mark a pivotal step in addressing the alleged ₹122 crore embezzlement at New India Cooperative Bank. The concerted efforts of law enforcement and regulatory authorities aim to bring the perpetrators to justice, recover the misappropriated funds, and reinforce the integrity of the banking system to protect the interests of all stakeholders involved.
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