More arrests likely in New India Cooperative Bank case as probe gathers pace

new india co-operative bank

More arrests are likely in the coming days as the investigation into the collapse of New India Cooperative Bank, whose board was superseded by the Reserve Bank of India in February, moves forward, sources have told Moneycontrol.

Investigators are also expected to question more employees of the Mumbai-based bank barred from taking deposits or issuing loans following misappropriation of funds.

“A lot of facts are unfolding in the case, which will lead to more arrests in the case,” one of the sources said on condition of anonymity.

So far, Mumbai Police's economic offences wing (EOW) has arrested four accused in the case — former CEO Abhimanyu Bhoan, developer Dharmesh Paun, former general manager Manohar Arunachalam and head of accounts Hitesh Mehta.

On March 11, the Mumbai Police conducted a polygraph test, better known as a lie- detector test, on Mehta at a Forensic Science Laboratory in Kalina, EOW officials told Moneycontrol. He was asked 50 questions and the test report is expected on March 17,  police officials said.

Mehta was arrested last month for allegedly siphoning Rs 122 crore from the bank’s treasury. Mehta, who managed the Dadar and Goregaon branches, is accused of misusing his position between 2020 and 2025.

Police also searched the Malabar Hill residence of the bank’s former chairman Hiren Bhanu and his wife Gauri Bhanu, who, according to media reports, have fled the country. The officials claim to have found several documents which are being looked into.

Gauri was the vice chairman of the bank when the fraud took place. The couple used to stay in a rented flat in the posh south Mumbai neighbourhood.

On February 14, the RBI barred the bank from issuing new loans, suspended deposit withdrawals and superseded the board.

It also appointed an administrator and a committee of advisers to revive the bank and restore normal banking operations at the earliest.

Later on February 24, the RBI reconstituted the committee of advisers. "There is no change in the administrator. The Reserve Bank is closely monitoring the developments and shall continue to take necessary steps in the interest of the depositors of the bank," it said.

The same day it allowed depositors to withdraw up to Rs 25,000 with effect from February 27.

New India Co-operative Bank has been grappling with losses for the last two fiscals. The bank posted a loss of Rs 23 crore in FY24 and a loss of Rs 31 crore in the previous year.

The bank's advances fell to Rs 1,175 crore as of March 31, 2024, from Rs 1,330 crore a year earlier. Its deposits rose to Rs 2,436 crore from Rs 2,406 crore, the annual report said.