New India Bank case: Depositors ask RBI for measures to revive bank

An organisation representing depositors of the New India Co-Operative Bank, hit by alleged embezzlement of Rs 122 crore, have submitted a petition to the Reserve Bank of India, seeking immediate measures to revive the bank for ending their financial hardships.

In the petition, the organisation said it suspects that "deeper financial irregularities like undisclosed non-performing assets (NPAs) or additional frauds could be contributing to the crisis".

On February 15, the Economic Offences Wing (EOW) of the Mumbai police arrested Hitesh Mehta, General Manager and Head of Accounts of the New India Cooperative Bank, for allegedly misappropriating Rs 122 crore from the bank. Two days prior to that, the RBI had imposed several restrictions on the bank, including on withdrawal of funds by depositors, citing supervisory concerns emanating from the developments in the bank, and to protect the interest of its depositors. A day later, it superseded the cooperative bank's board for a year and appointed an administrator to manage its affairs. The investigation into the alleged discrepancies began when internal audits revealed significant cash shortages in the safes of the Prabhadevi and Goregaon branches in Mumbai. In a formal memorandum of demands submitted to RBI Governor Sanjay Malhotra, the New India Co-Operative Bank Depositors' Foundation comprising affected individuals and cooperative societies sought immediate remedial measures to alleviate their financial hardships and revive the bank. Foundation president T N Raghunatha said, "The petition highlights the plight of depositors who are unable to access their savings, which has impacted the daily lives, including medical expenses and education of family members. The depositors are suffering due to fraudulent activities perpetrated by the bank's management, rather than any mismanagement on their own part."  One of the primary grievances raised by the foundation is the inadequacy of the 5 lakh deposit insurance coverage, which is insufficient for many depositors with significantly higher savings. There have also been reports of bank officials pressuring customers to accept this payout without providing clarity on the fate of their remaining deposits. The petition argues that a fraud amounting to Rs 122 crore should not have been severe enough to destabilize a bank with a deposit base of Rs 2,436 crore as of March 2024. The forum suspects that deeper financial irregularities, such as undisclosed non-performing assets (NPAs) or additional frauds, may be contributing to the crisis. The depositors' foundation has demanded transparency from the RBI, seeking details on the audit findings of the NICB's accounts.

 

"The crisis is not just a financial issue but a matter of livelihoods and security for thousands of families," it said, and urged the central bank to take immediate steps to address their concerns and ensure stability in the cooperative banking sector.  Businessman held in New India Bank scam; seventh arrest so far 

The Mumbai police have arrested businessman Javed Azam in connection with the Rs 122 crore scam at New India Cooperative Bank, an official said on Tuesday.

 

The Economic Offences Wing (EOW) of the city police held Azam (48) late Monday night, making it the seventh arrest in the case so far, he said. "During the investigation, the EOW found that Azam had received Rs 18 crore through one of the arrested accused, Unnathan Arunachalam. Azam, a resident of Kandivali, runs a business of electrical goods distribution," the official said. Unnathan Arunachalam, who was also in the trade of electrical goods, had come in contact with Azam, he said. Investigation has revealed that Unnathan and his father Manohar Arunachalam siphoned off Rs 33 crore from the bank, he said.

 

Former General Manager and Head of Accounts at the bank, Hitesh Mehta, who is the prime accused in the case, had given Rs 15 crore to Manohar Arunachalam in 2019, followed by Rs 18 crore at his office and handed over to Azam, he added. According to the police, Rs 122 crore were siphoned off from the safes of New India Cooperative Bank's Prabhadevi and Goregaon offices in Mumbai. A few more individuals have also been named as wanted accused, including the bank's former chairman Hiren Bhanu and his wife, ex-vice-chairperson Gauri Bhanu, who fled abroad just before the scam came to light. Last week, the Mumbai police conducted a polygraph test on prime accused Hitesh Mehta. The test, also called a lie detector test, was conducted on Mehta at the Forensic Science Laboratory in the city's Kalina area. According to EOW sources, the test results indicate possible deception in Mehta's responses. The authorities are probing further financial transactions and possible involvement of more individuals in the large-scale scam, the official said, adding hat more arrests are likely as the investigation progresses.