Mumbai’s New India Cooperative Bank embroiled in fraud; depositors struggle to withdraw funds
New India Co-operative Bank fraud case: The Reserve bank of india superseded the Maharashtra-based New India Co-operative Bank board for 12 months after imposing several financial and service restrictions due to irregularities in its lending practices. The mumbai police unearthed a ₹122 crore-worth financial fraud committed by the lender’s former general manager (GM), Hitesh Mehta, who the Economic Offences Wing arrested.
The ex-GM was questioned for over three hours on February 15, and his statement was recorded before the probe agency concerning the case registered against him Mehta will be produced before a local court on Sunday. The RBI, along with superseding the cooperative bank’s board, appointed an administrator to manage its ongoing affairs.
n its instructions against the bank, the RBI said,”It is hereby notified for information of the public that the RBI has issued certain Directions to New India Co-operative Bank Limited, Mumbai (“the bank”), whereby, as from the close of business on February 13, 2025, the bank shall not, without prior approval of RBI in writing, grant or renew any loans and advances.”
According to RBI’s order, account holders cannot make any investment, incur any liability, including borrower of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in the discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated February 13
Considering the bank’s present liquidity position, the Bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor but is allowed to set off loans against deposits subject to the conditions stated in the RBI Directions.”
“These directions are necessitated due to supervisory concerns emanating from the recent material developments in the bank and to protect the interest of depositors,” said the central bank in its order against the lender.
Hence, the RBI prohibited the bank from issuing new loans suspended deposit withdrawals, and superseded the bank’s board for mismanagement. However, the lender can set off loans against deposits subject to the conditions stated in the RBI directions. It may also incur expenditures on certain essential items such as employee salaries, rent, and electricity bills
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