The New India Cooperative Bank, which was once known for supporting small entrepreneurs, hawkers, and auto unions in Maharashtra and Gujarat, is now embroiled in a major financial scandal.
Investigators from the Mumbai police’s Economic Offences Wing (EOW) have uncovered a complex web of financial mismanagement, leading to the bank accumulating approximately ₹400 crore in non-performing assets (NPAs).
This comes after revelations that over 2,000 loans were granted under highly dubious circumstances, many of which were later sold off to asset reconstruction companies (ARCs) at throwaway prices.
The scandal has implicated the bank’s top brass, including former General Manager (Accounts) Hiten Mehta and former Chief Executive Officer (CEO) Abhimanyu Bhoan, both of whom have been arrested for their involvement in the alleged embezzlement of ₹122 crore from the bank’s cash reserves.
The former chairman of the bank, Hiren Bhanu, who is also a key figure in the fraud, has fled the country, and a lookout circular has been issued against him. The police have since escalated their investigation, with a particular focus on the vast network of loans that turned into NPAs under suspicious circumstances.
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The Emergence of the Fraud
The fraud came to light after a surprise audit conducted by the Reserve Bank of India (RBI) in February 2025, during which ₹122 crore was found missing from the bank’s cash reserves. Of the missing funds, ₹112 crore was unaccounted for at the bank’s Prabhadevi branch, and an additional ₹10 crore was found to be missing from its Goregaon branch.
Hiten Mehta, who was in charge of managing the bank’s cash reserves, became the first person to be arrested after confessing to his involvement in the cash theft. Investigators later revealed that Mehta had been helping Hiren Bhanu, the bank’s chairman, remove large sums of cash from the vaults on several occasions.
Bhanu would return the money after a few months, but much of it was never deposited back.
In his interrogation, Mehta admitted that he had taken ₹22 crore from the vault and handed it over to Bhanu. However, when Mehta tried to replicate this scheme on his own, the money was not returned, and the bank was left with a significant shortfall.
The scandal took an even darker turn when it was revealed that Bhanu and his family had fled the country shortly before the fraud was discovered. Bhanu, who is a British citizen, left India for Abu Dhabi on January 26, while his wife and children followed suit in February.
The police have declared all four family members as proclaimed offenders and have issued a blue corner notice through Interpol for their arrest.
Kickbacks and Non-Performing Loans
The investigation revealed that alongside the embezzlement of funds, Mehta, Bhanu, and Bhoan had also been involved in a large-scale scheme to extend loans to borrowers in exchange for kickbacks.
The loans, which amounted to around ₹400 crore, were granted under questionable conditions and later turned into non-performing assets (NPAs). In an attempt to hide the bank’s deteriorating financial condition, the accused arranged to sell these NPAs to asset reconstruction companies at highly discounted prices, effectively masking the bank’s true liabilities.
In addition to the missing cash, investigators found that at least 2,014 loan accounts had turned into NPAs. The total value of these loans was around ₹300 crore.
This prompted the EOW to initiate a separate preliminary inquiry into the NPAs. Investigators believe that many of the loans were part of a deliberate strategy to inflate the bank’s balance sheet by providing loans to borrowers in return for illegal bribes.
The bank’s management would later sell off these loans at discounted rates to ARCs, making the financial situation appear more stable than it actually was.
The Preity Zinta Loan: A Curious Case
Among the loans under scrutiny is an ₹18-crore advance made to actress Preity Zinta in 2011. According to the records, this loan was declared an NPA on March 31, 2013, when the outstanding amount had reduced to ₹11.47 crore.
Zinta eventually settled the loan in April 2014 by paying ₹10.74 crore, while ₹1.55 crore was waived off. The EOW has flagged this transaction as highly suspicious, given that the recovery amount was a fraction of the original loan. Investigators are in the process of appointing a forensic auditor to further analyze the questionable loan settlements, as the small recovery amounts raise significant red flags.
Allegations Against RBI
Further complicating the matter, hotelier Sachidanand Shetty has come forward with allegations against Bhanu and the bank’s management. Shetty claims that Bhanu had filled the bank’s board with his cronies and exerted total control over the institution’s operations.
According to Shetty’s complaint, Bhanu and Bhoan colluded to advance loans worth ₹400 crore in exchange for kickbacks, and many of these loans later became NPAs. Shetty also expressed concerns about the role of the RBI, alleging that the central bank continued to award the bank high ratings, including AAA+ certifications during audits from 2021 to 2023, despite the growing problem of NPAs.
Shetty has raised the possibility that the Bhanus may have influenced RBI officials, further compounding the financial misconduct.
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The Bank’s Troubled History
The New India Cooperative Bank, founded in 1968 as the Bombay Labour Cooperative Bank Ltd., has a long history tied to socialist leader George Fernandes and prominent criminal lawyer and trade unionist Ranjit Bhanu.
Originally catering to the needs of small businesses, the bank grew to include branches in Maharashtra and Gujarat, with a focus on providing financial services to blue-collar workers. However, the bank’s troubled financial state in recent years has raised questions about its leadership and oversight.
The bank’s woes deepened as it became a target for financial manipulation and embezzlement by its top executives. The RBI’s role in certifying the bank’s financial health, despite the mounting NPAs, is now under intense scrutiny.
What’s Next?
The EOW continues to investigate the fraudulent activities surrounding the New India Cooperative Bank. The appointment of a forensic auditor will play a crucial role in unraveling the full extent of the financial mismanagement and fraud. The inquiry is expected to open a Pandora’s box, revealing further irregularities in the bank’s operations.