New India Cooperative Bank's GM held in Rs 122 cr fraud: How it happened

The bank's general manager allegedly withdrew cash from the bank's Prabhadevi and Goregaon branches, siphoning off funds since the Covid-19 pandemic

A Mumbai holiday court on Sunday remanded Hitesh Mehta, the general manager and head of accounts at New India Cooperative Bank, in police custody till February 21 over allegations of misappropriating Rs 122 crore from the bank’s safes.

 

Mehta, 57, allegedly withdrew cash from the bank’s Prabhadevi and Goregaon branches, siphoning off funds since the Covid-19 pandemic. He reportedly confessed to the crime during police questioning, reported Hindustan Times.

 

How the fraud was exposed  

 

The massive fraud came to light last week on Wednesday, when a Reserve Bank of India (RBI) audit team visited the bank’s Prabhadevi head office.

 

“They asked all senior officers to be present and called for the keys to the bank’s safe. Senior officials, including accounts head Hitesh Mehta, were present. His team is responsible for filing TDS, GST, and managing cash,” a police officer told Hindustan Times.

 

As RBI officials counted the cash, they discovered Rs 112 crore missing from the safe. The audit team immediately questioned employees, but no one had a satisfactory explanation. Further checks revealed that the Goregaon branch also had missing funds, bringing the total misappropriated amount to Rs 122 crore. 

 

Following the discovery, Devashish Ghosh, the bank’s chief accounting officer, launched an internal investigation. Later that evening, Mehta went to meet RBI officials and allegedly admitted to stealing the money.

 

A case was immediately filed against Mehta and other unknown associates under Section 316(5) – Criminal breach of trust by a public servant  and Section 61(2) – Criminal conspiracy under the Bharatiya Nyaya Sanhita, 2023

 

RBI's immediate action  

 

In response to Mehta’s alleged admission, the RBI on Thursday imposed strict restrictions on the bank, limiting withdrawals by depositors due to “supervisory concerns” and to safeguard customers’ funds.

 

A day later, the RBI superseded the bank’s board for a year and appointed an administrator to oversee its operations.