New India Co-op Bank vault had 12 times its capacity on paper: Report
New Delhi, Feb 26, 2025
The Mumbai Police's Economic Offences Wing (EOW) is probing an alleged Rs 122-crore embezzlement at the bank and has arrested three people so far, including two former senior executives of the lender.
In Short
Audit firms failed to report financial irregularities at the bank
EOW is questioning auditors and may conduct a forensic audit
RBI has taken control of the bank's board amid ongoing investigation
New India Cooperative Bank’s Prabhadevi branch in Mumbai had the capacity to store Rs 10 crore in its vault. However, on the day of an inspection by the Reserve Bank of India (RBI), the bank’s records showed that Rs 122.028 crore was supposedly in the safe, according to Mumbai Police officials investigating a fraud case, reported news agency PTI.
The Mumbai Police’s Economic Offences Wing (EOW) is probing an alleged Rs 122-crore embezzlement at the bank and has arrested three people so far, including two former senior executives of the lender.
The RBI inspection team visited the corporate office branch of the bank at Prabhadevi on February 11, where they discovered that Rs 122 crore in cash was missing from the vault, an official said.
The bank’s balance sheet for the Prabhadevi and Goregaon branches showed a total of Rs 133.41 crore being stored in safes at both locations.
On the day of the RBI inspection, the Prabhadevi branch’s records specifically stated that it had Rs 122.028 crore in its vault. However, upon investigation, the EOW found that the Prabhadevi vault could hold only Rs 10 crore, and only Rs 60 lakh was actually present.
At the Goregaon branch, the vault, which also had a capacity of Rs 10 crore, contained Rs 10.53 crore on the day of the inspection. This raised further questions about the bank’s financial records and whether auditors had overlooked the missing cash.
The EOW is now investigating why the auditing firms responsible for checking the bank’s financial records did not report any irregularities. Several chartered accountancy firms were responsible for auditing the balance sheets, daily reports, and cash books. It was their duty to verify the actual cash present in the safes, an official said.
As part of the probe, the EOW has summoned representatives from half a dozen firms that audited the bank at different times between 2019 and 2024. These firms were involved in statutory, concurrent, or internal audits during the period when the alleged fraud took place. The initial audit of the bank was done by M/s Sanjay Rane Associates. A partner in the firm, Abhijeet Deshmukh, has been questioned by the EOW for the last four days. Another partner, Sanjay Rane, has also been summoned for questioning. Representatives from all auditing firms linked to the lender have been called from Wednesday onwards to record their statements.
"If needed, the EOW will seek a forensic audit of the bank’s financial records to find out how Rs 122 crore was misappropriated," an official said as quoted by PTI.
The bank’s former CEO, Abhimanyu Bhoan, is among the three people arrested in the case. According to investigators, Bhoan had signed all audit reports and balance sheets of the bank and was aware of the actual cash stored in the vaults. The police believe he was part of the conspiracy.
Besides Bhoan, the bank’s ex-general manager Hitesh Mehta and real estate developer Dharmesh Paun have also been arrested in connection with the fraud. The alleged misappropriation of funds came to light following an RBI inspection.
According to the police, Devarshi Ghosh, the acting chief executive officer of the bank, filed a complaint against Mehta and others at Dadar police station in central Mumbai nearly two weeks ago. The complaint accused Mehta and his associates of conspiring to embezzle Rs 122 crore from the bank’s safes at its Prabhadevi and Goregaon branches.
Based on the complaint, a case was registered, and the investigation was handed over to the EOW. The accused have been booked under sections 316(5) (criminal breach of trust by public servants, bankers, and others in positions of trust) and 61(2) (criminal conspiracy) of the Bharatiya Nyaya Sanhita (BNS).
Following the revelations, the Reserve Bank of India took control of the cooperative lender’s board for a year and appointed an administrator to oversee its operations. The investigation is ongoing, with officials working to determine how the fraud was carried out and if more individuals were involved.
[India Today]
