Reacting to the troubling developments at New India Cooperative Bank, senior UCB leader Jyotindra Mehta said the incident has shaken people across the country, undoing in a single stroke all the progress that urban cooperative banks (UCBs) have made in various fields.
Mehta emphasized that the UCB sector remains fully committed to protecting the interests of all depositors—not just small ones but also those who have entrusted their hard-earned money to the bank. He urged regulators to take a sympathetic view of depositors whose savings exceed the Rs 5 lakh insurance limit.
Recalling the bank’s origins, Mehta noted that it was established by George Fernandes to support financially weak individuals and taxi drivers. Over time, he observed, generations have changed, as has the institution’s culture.
As the chairman of the Umbrella Organization of UCBs, which aims to implement high-tech surveillance in banking operations, Mehta stressed the reliability of technology, stating that “between man and machine, the latter is always neutral and therefore preferable.” While details of what went wrong and how the scam remained undetected for four years are still unclear, he asserted that advanced technology could help prevent such frauds in the future.
Although Mehta refrained from assigning blame, several other leaders, speaking anonymously, questioned the role of the Reserve Bank of India (RBI) and its failure to detect the scam despite it continuing for four years.
The Economic Offences Wing (EOW) of Mumbai Police arrested Hitesh Mehta, general manager of New India Cooperative Bank, on Saturday for allegedly embezzling Rs 122 crore in cash from the bank’s Prabhadevi and Goregaon branches. Officials reported that the 57-year-old admitted to siphoning off money from the bank’s safes since the pandemic. The fraud was uncovered on Wednesday when an RBI audit team visited the bank’s Prabhadevi head office.
Hitesh Mehta, who had been with the bank since 1987 and was set to retire in October, will be presented before the holiday court on Sunday.
The RBI, responding to the crisis, superseded the bank’s board for a year on Friday, triggering panic among customers. While some accessed their lockers, withdrawal requests were denied, with notices stating that deposits would be refunded within 90 days. Police were deployed at branches to manage crowds.
New India Cooperative Bank operates 24 branches across Mumbai, Thane, Palghar, and Navi Mumbai. The RBI has appointed former SBI general manager Shreekant as administrator for 12 months.
