The Economic Offences Wing (EOW) of Mumbai Police, probing the Rs 122 crore embezzlement at the New India Cooperative Bank, has brought the Reserve Bank of India (RBI) under the spotlight. The investigative team is questioning how such a large-scale fraud went undetected for nearly three years despite the bank being under RBI’s direct supervision since 2021. According to sources, the EOW has recorded statements from the RBI’s inspection team that conducted a routine audit on February 12 and flagged major cash discrepancies. However, the RBI has yet to provide key documentation requested by the EOW, including internal notes explaining the rationale behind their surprise raid.
A senior EOW officer of Deputy Commissioner rank is likely to meet RBI officials to understand how rising non-performing assets (NPAs) and abnormal cash accumulation at the bank escaped attention for so long, despite RBI officers having access to the bank’s Core Banking System (CBS) and a representative being seated on the board. The RBI inspection team, led by a Deputy General Manager, had conducted a routine check at the bank’s Prabhadevi corporate office when they discovered the missing Rs 122 crore. Their statements have since been recorded, and scrutiny has expanded to include past RBI-appointed supervisors Anish Kumar and Ashish Gupta, and audit department officials who consistently reported “no adverse remarks.”
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New Legal Provision Invoked
In a significant development, the EOW has invoked Section 107 of the recently introduced Bharatiya Nagarik Suraksha Sanhita (BNSS) to seize properties identified as proceeds of crime. This is reportedly the first time the section has been applied in Maharashtra. “We are using every legal remedy available to us to recover the embezzled amount,” said Nishith Mishra, Joint Commissioner, EOW. “Based on our application, the court granted permission to invoke Section 107. Accordingly, 21 immovable properties belonging to five of the accused were attached.”
These properties were purchased between 2019 and 2024—the same period during which the scam was perpetrated. The assets are now legally treated as proceeds of crime, as per the new BNSS law, especially in cases where acts like the Maharashtra Protection of Interest of Depositors (MPID) Act cannot be invoked.
Accusations and Counterclaims
Among those arrested are former General Manager Hitesh Mehta and other senior officials. The EOW has named former Vice Chairman Hiren Bhanu and his wife, acting Chairperson Gauri Bhanu, as wanted accused. In a recent letter to the EOW, Bhanu shifted the blame entirely to Mehta, alleging that he carried out all transactions without the knowledge of the bank’s top board.
Bhanu’s letter also included a signed affidavit from Mehta taking full responsibility. However, Mehta has since retracted this in EOW custody, claiming that Rs 26 crore was transferred to the Bhanus. Investigators are now examining these contradictory statements closely.
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Questions Over Supervision and Audit
The bank has been under RBI’s Supervisory Action Framework since May 2021, yet audit reports by CA Prakash Vernekar, Deputy General Manager of the Inspection and Audit Department, showed no discrepancies. RBI supervisors Ravindran and Rajat had regular access to CBS reports and often contacted top executives, including Mehta and ex-CEO Abhimanyu Bhoan, late at night seeking data for next-day meetings.
EOW officials are questioning why these red flags weren’t detected earlier, despite the RBI’s continuous oversight. “It is concerning that the regulatory systems in place failed to identify such massive financial irregularities over several years,” said a senior officer. As the investigation deepens, this case is set to become a litmus test for the effectiveness of India’s new criminal law framework and the accountability of regulatory institutions.
