Synopsis: The Mumbai Police's Economic Offences Wing (EOW) is investigating a Rs. 122 crore embezzlement at New India Cooperative Bank, involving former top executives. The Reserve Bank of India (RBI) has intervened, imposing operational restrictions and appointing an administrator to manage the bank's affairs.
The EOW has arrested three individuals, including former CEO Abhimanyu Bhoan and ex-General Manager Hitesh Mehta, in connection with the alleged misappropriation of Rs. 122 crore from New India Cooperative Bank.
The fraud was uncovered during an RBI inspection on February 11, 2025, which revealed significant discrepancies between the bank's recorded cash reserves and the actual cash available.
Specifically, the Prabhadevi branch's vault, designed to hold Rs. 10 crore, was reported to contain Rs. 122.028 crore, while only Rs. 60 lakh was physically present.
Similarly, the Goregaon branch's vault, with a Rs. 10 crore capacity, held Rs. 10.53 crore, aligning with records.
RBI's Intervention:
In response to these findings, the RBI has taken decisive action to protect depositors' interests.
On February 13, 2025, the central bank imposed a six-month moratorium on the New India Cooperative Bank, restricting withdrawals and halting new loan issuances.
The following day, the RBI superseded the bank's board for a year and appointed Shreekant, a former Chief General Manager of the State Bank of India, as the administrator.
A Committee of Advisors has also been established to assist in managing the bank's operations.
Auditing Oversight:
The EOW's investigation has extended to the auditing firms responsible for reviewing the bank's financial records.
Questions have arisen regarding how such significant discrepancies went unnoticed during regular audits.
Chartered accountants from various firms have been summoned for questioning to determine the extent of oversight and any potential complicity.
Impact on Depositors:
The RBI's restrictions have significantly impacted the bank's depositors, who are currently unable to withdraw their funds.
In response to the crisis, the RBI is considering measures to alleviate depositor distress, including allowing special withdrawals for personal and medical emergencies up to the insured limit of Rs. 5 lakh.
As of March 31, 2024, the bank held outstanding deposits of Rs. 2,436 crore and advances of Rs. 1,175 crore.
Conclusion:
The unfolding situation at New India Cooperative Bank underscores the critical importance of robust internal controls and vigilant regulatory oversight in the banking sector.
The alleged embezzlement not only highlights potential vulnerabilities within financial institutions but also emphasizes the need for stringent auditing practices to detect and prevent such frauds.
As the investigation progresses, it serves as a stark reminder of the consequences of lapses in financial governance and the imperative to protect depositor interests.
Disclaimer: This article is for informational purposes only and should not be construed as financial or legal advice. Readers are encouraged to consult with qualified professionals regarding any decisions related to banking and financial matters.
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