Court Denies Bail to Ex-GM in Rs 122 Crore New India Co-Op Bank Fraud Case
Ex-GM Hitesh Mehta was denied bail over alleged Rs 122 crore misappropriation from New India Co-op Bank.
A Mumbai court has denied bail to Hitesh Mehta, the former general manager and head of accounts at New India Co-operative Bank, in a high-profile fraud case involving the alleged misappropriation of Rs 122 crore from the bank's reserves over five years, citing the seriousness of the charges and risks of evidence tampering. Additional Chief Judicial Magistrate Abhijit R. Solapure at Esplanade Court rejected Mehta's bail application on October 18, emphasising his central role in the scam uncovered during a February 2025 Reserve Bank of India (RBI) inspection at the bank's Prabhadevi headquarters.
The probe initially revealed an Rs 112 crore cash shortfall, escalating to Rs 122 crore after examining irregularities at the Goregaon branch. Prosecutors allege Mehta orchestrated unauthorised fund withdrawals and circulated the money to associates through fictitious entries, as outlined in the chargesheet. "This accused has been instrumental in taking cash and putting it in circulation by transferring it to other accused," the court order stated, dismissing defence claims of delayed FIR registration, coerced confessions from a February 14 affidavit, and flawed polygraph testing. The magistrate underscored independent evidence implicating Mehta, warning that liberty could enable interference in the ongoing investigation.
New India Co-operative Bank, established in 1987 to serve Mumbai's retail depositors and SMEs, now operates under RBI restrictions limiting new deposits to Rs 1 lakh per account to protect public funds. The fraud exposes systemic weaknesses in India's 1,400+ urban cooperative banks, which manage Rs 10 lakh crore in deposits amid heightened regulatory scrutiny following high-profile collapses like Punjab and Maharashtra Co-operative Bank in 2020. RBI's 2023 reforms mandate enhanced audits and digital oversight, yet governance lapses persist, eroding trust in a sector critical for financial inclusion. A forensic audit is tracing the money trail, with potential implications for other implicated staff, though no additional arrests were detailed in the hearing.
The ruling aligns with a 15% annual rise in white-collar crime convictions per National Crime Records Bureau data, reflecting judicial firmness amid economic recovery pressures. Bank management has reassured depositors of recovery measures, but the scandal threatens licence suspension if violations continue. As investigations proceed under RBI supervision, the case could spur nationwide reforms, compelling cooperatives to adopt blockchain ledgers and AI-driven fraud detection—tools already standard in private banking. For Mumbai's middle-class savers, the episode underscores the fragility of cooperative models, prompting calls for depositor insurance expansion beyond the current Rs 5 lakh cap.
