Legal action has been initiated against Hitesh Mehta, the General Manager and Head of Accounts at New India Cooperative Bank, due to allegations of financial irregularities. An FIR has been registered by the Dadar police under Sections 316(5) and 61(2) of the Bharatiya Nyaya Sanhita, following a complaint by Worli resident Devashri Gosh. The case has been transferred to the Economic Offences Wing (EOW) for a thorough investigation. Allegations have been made that Mehta and his associates misappropriated ₹122 crore from customer deposits at the bank’s Prabhadevi and Goregaon branches. A detailed probe into the fraudulent activities is now being conducted to determine the extent of the financial mismanagement.
A state of panic has been witnessed among depositors of the bank after regulatory action was taken by the Reserve Bank of India (RBI). A large number of customers have rushed to bank branches across Mumbai, including Ghatkopar, seeking clarity about their deposits after a 12-month supersession of the bank’s board was announced by the RBI. It has been stated that this measure was imposed due to poor governance standards that had been observed within the institution. A decline in the financial stability of the bank has been reflected in its recent performance, with consecutive losses being recorded.
It has been reported that losses amounting to ₹31 crore in FY 2023 and ₹23 crore in the fiscal year ending March 2024 were incurred. A drop in total advances from ₹1,330 crore in March 2023 to ₹1,175 crore by March 2024 has also been noted, highlighting the worsening financial position of the bank. Severe operational restrictions have been placed on the bank by the RBI in response to the ongoing financial crisis. It has been ordered that loans must not be granted or renewed, investments must not be made, liabilities must not be incurred, and fresh deposits must not be accepted without prior approval from the regulator.
A complete restriction has been imposed on withdrawals from savings, current, and other deposit accounts, with limited exceptions for cases where loans may be adjusted against deposits. However, certain essential expenses such as employee salaries, rent, and utility bills have been allowed under the prescribed limits set by the RBI. A measure to safeguard depositors has been introduced, under which compensation of up to ₹5 lakh per account will be provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC) after verification of claims.
An administrator has been appointed by the RBI to oversee the bank’s operations, with Shreekant, a former Chief General Manager of the State Bank of India, being entrusted with the responsibility. Assistance is being provided by a Committee of Advisors, which includes former SBI General Manager Ravindra Sapra and Chartered Accountant Abhijeet Deshmukh. It has been clarified by the RBI that the restrictions should not be viewed as an indication of license cancellation, and banking operations will be permitted to continue under strict regulatory supervision. The situation is being closely monitored, and modifications to the restrictions are expected to be made depending on the bank’s financial recovery. A six-month period has been set for the restrictions, which will remain in force until February 13, 2025, subject to further review.
New India Cooperative Bank has been operating for over four decades, with 30 branches having been established across Mumbai, Thane, Surat, and Pune. Scheduled Bank status had been granted in 1990, and Multi-State status was acquired in 1999. Despite its strong legacy, the bank has been struggling with financial mismanagement, leading to the intervention of regulatory authorities.
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