What is all the fuss about Mumbai-based New India Co-operative Bank
The Reserve Bank of India (RBI) has taken decisive action against New India Co-operative Bank Ltd., Mumbai, by superseding its Board of Directors for a period of 12 months. This move comes amid concerns over governance failures and financial mismanagement at the bank. Shreekant, former Chief General Manager of the State Bank of India (SBI), has been appointed as the Administrator to oversee the bank’s operations. Additionally, the RBI has set up a Committee of Advisors, comprising Shri Ravindra Sapra (former General Manager, SBI) and Shri Abhijeet Deshmukh (Chartered Accountant), to assist in managing the bank’s affairs.
The RBI’s intervention follows financial irregularities and governance issues that have raised supervisory concerns. The central bank has issued stringent restrictions on the bank’s operations, preventing it from granting or renewing loans, making fresh investments, or accepting new deposits without prior approval. In light of liquidity concerns, the bank has also been directed to halt withdrawals from savings and current accounts, though loan offsets against deposits are permitted under specific conditions.
Furthermore, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has assured depositors that up to Rs 5 lakh of their funds are insured. Depositors are advised to contact bank officials or visit the DICGC website for further details. The RBI has clarified that these restrictions do not indicate a cancellation of the bank’s license and that the bank will continue operations under these limitations until its financial position improves. The restrictions are set to remain in force for six months, subject to review.
Arrest of Former Bank Official for Rs 122 Crore Fraud
The Economic Offences Wing (EOW) of the Mumbai Police arrested Hitesh Praveenchand Mehta, a former General Manager and Head of Accounts at New India Co-operative Bank, for allegedly embezzling Rs 122 crore between 2020 and 2025. The funds, primarily siphoned from the bank’s Prabhadevi and Goregaon branches, were misappropriated under Mehta’s oversight. His arrest follows a complaint filed by the bank’s now-dismissed CEO, Devarshi Ghosh. Mehta will be presented in court on Sunday.
EOW officials conducted a raid at Mehta’s residence, seizing crucial documents linked to the fraud. The investigation revealed that the misappropriation began post-pandemic and continued until recently. Mehta, who was slated to retire in 2026, is accused of systematically withdrawing funds from the bank’s treasury. His lawyer, Chandrakant Ambani, has claimed that his client is being framed.
Financial Standing and Impact on Depositors
New India Co-operative Bank serves approximately 1,30,000 depositors with an outstanding deposit base of Rs 2,436 crore as of March 2024. Despite rising deposits, the bank reported losses of Rs 33 crore in FY24, up from Rs 22.8 crore in the previous fiscal year. Its advances dropped from Rs 1,330 crore in FY23 to Rs 1,175 crore in FY24.
The RBI’s decision to impose restrictions has impacted depositors, though it reassured that nearly 90% of the bank’s customers have deposits below Rs 5 lakh, making them eligible for full insurance coverage under the DICGC scheme. The restrictions mark a significant regulatory action against a cooperative bank in Maharashtra since the 2019 collapse of Punjab and Maharashtra Co-operative (PMC) Bank due to fraudulent lending practices.
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