Two days after the Reserve Bank of India (RBI) imposed restrictions on New India Cooperative Bank (NICB), the Economic Offences Wing (EOW) of the Mumbai police on Saturday arrested its former General Manager Hitesh Mehta in a Rs 122 crore funds' embezzlement case.

Mehta’s arrest came after the NICB’s chief executive officer Devarshi Shishir Kumar Ghosh lodged a complaint against him with the Dadar police on Friday. Mehta will be produced before a holiday court on Sunday. 

Ahead of Mehta’s arrest, the EOW officers raided his residence at Dahisar in north Mumbai and seized some incriminating documents.

In his complaint, the Bank’s CEO has alleged that Mehta and one of the senior employee of the bank had in their custody the bank’s the cash in the bank’s vaults at its Prabhadevi and Goregaon offices and that together, they had allegedly hatched a criminal conspiracy and embezzled about Rs 122 crore. Ahead of Mehta’s arrest, the police had begun to investigate the alleged irregularities that took place in the bank between 2020 and 2025. On Friday, the EOW had recorded the statement of a senior official.

The EOW officials have registered an FIR under sections 316(5) (criminal breach of trust by a public servant or banker, merchant, broker, attorney or agent) and 61(2) (criminal conspiracy) of the Bharatiya Nyaya Sanhita (BNS).

The RBI’s decision to impose severe restrictions on the bank, including withdrawal of money from the savings and current accounts of the bank, has sent shocking waves through the country’s commercial capital, with thousands of panic-stricken depositors gathering before the branches of the bank to check if their money lying with the bank was “safe” and if they would be allowed to withdraw the same. 

The RBI’s restrictions prevent the bank from issuing new loans, making investments, borrowing funds or allowing withdrawals for six months due to concerns over its financial stability.

Having superseded the bank’s board of directors for 12 months, citing “poor governance standards”, the RBI has appointed Shreekant, a former chief general manager of the State Bank of India (SBI), as the administrator to manage the bank’s affairs. Additionally, a committee of advisors has been formed to assist him.

The RBI has barred the bank from granting or renewing any loans and advances, making any investment, incurring any liability including borrowing funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations without prior approval of RBI in writing.

The RBI restrictions came into effect after the close of business on February 13, and will be valid for six months.

In all, NICB has 30 branches and a deposit base of Rs 2,436 crore as of March 2024. The bank had posted losses of Rs 30.74 crore in 2022-23 and Rs 22.78 crore in 2023-24. This is the third major action taken against a co-operative bank in Maharashtra  over alleged financial irregularities,

Earlier, on September 24, 2019, the RBI had Tuesday placed Punjab & Maharashtra Cooperative (PMC) Bank Ltd under regulatory restrictions, thus barring the bank from carrying out routine and major financial transactions, including withdrawal of cash exceeding Rs 1,000 by each of the depositors, for a period of six months.