Mumbai EOW chargesheets ten in New India Co-operative Bank case

What the Record Shows

The Reserve Bank of India (RBI) placed New India Co-operative Bank Limited, Mumbai, under directions on 13 February 2025, acting under Section 35A of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The bank was barred from granting or renewing loans, making investments, incurring fresh liabilities or accepting new deposits without the RBI's written approval, and was directed not to allow withdrawals from any depositor's account, though set-off of loans against deposits was permitted. The RBI stated the step was "necessitated due to supervisory concerns emanating from the recent material developments in the bank, and to protect the interest of depositors of the bank."

On 14 May 2025 the Mumbai Police Economic Offences Wing (EOW) filed a chargesheet running to roughly 12,600 pages against ten accused, in a matter the EOW alleges involves the misappropriation of about Rs 122 crore from the bank's Prabhadevi and Goregaon branches. The document names, among others, Hitesh Mehta, the bank's former general manager and head of accounts, and a developer, Dharmesh Paun.

The shortfall came to light during an RBI cash verification on 12 February 2025, a day before the directions were imposed. An FIR was first registered at Dadar police station and the investigation was transferred to the EOW. The RBI separately superseded the bank's board for twelve months and appointed an administrator, drawn from the State Bank of India's senior ranks, assisted by a committee of advisers. None of the allegations in the chargesheet has yet been tested at trial.

How It Worked

Per the EOW's chargesheet, cash was withdrawn in stages from the vaults of the bank's Prabhadevi and Goregaon branches from around 2019-20 onward and handed to co-accused for deployment in their own businesses. The EOW alleges that roughly Rs 70 crore of the total was routed into a slum-rehabilitation project at Kandivali in the Mumbai suburbs. These are the investigating agency's allegations; they have not been adjudicated.

The procedural history is compact. The discrepancy surfaced on the RBI's routine cash verification on 12 February 2025; the central bank imposed its Section 35A directions the following day; an FIR was lodged and transferred to the EOW; and arrests followed. According to the EOW, the former general manager and head of accounts, Hitesh Mehta, and the developer, Dharmesh Paun, were taken into custody during the investigation. The agency filed its consolidated chargesheet against ten accused on 14 May 2025.

The EOW has, per its filings, attached assets of about Rs 167 crore in the course of the investigation, a figure larger than the alleged shortfall. Two of those named, the bank's former chairman and his wife, were declared proclaimed offenders by the court after being reported absent from the proceedings. A proclaimed-offender declaration is a court order recording that a person has failed to appear despite process; it is a procedural finding about non-appearance and not a finding of guilt.

The Enforcement Directorate (ED) has opened a parallel investigation under the Prevention of Money Laundering Act (PMLA), examining whether any of the sums the EOW describes constitute proceeds of crime. That inquiry is at the investigation stage.

Who Lost Money

The people most directly affected were the bank's own depositors. When the RBI's directions took effect, withdrawals were frozen entirely, leaving small savers, pensioners and salary-account holders across the Mumbai suburbs unable to access their balances. For a co-operative bank of this size, that freeze fell hardest on households with modest, everyday deposits rather than large institutional customers.

Under the deposit-insurance framework, eligible depositors are entitled to claim up to Rs 5,00,000 through the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly owned RBI subsidiary. The RBI's press release confirmed that ceiling for New India Co-operative Bank's depositors. Balances above Rs 5 lakh are not covered by that insurance and their recovery depends on how the bank's affairs are ultimately resolved and on any assets the agencies recover.

The roughly Rs 167 crore the EOW says it has attached is not the same as money returned to depositors. Attached assets remain subject to the outcome of the case and to court-supervised distribution, and depositors typically receive far less, and far later, than headline attachment figures suggest. You can see what an insured deposit is actually worth using Oquilia's fixed deposit calculator.

Where It Stands Now

The matter is at the chargesheet stage and trial is pending. The ten accused named in the EOW's 14 May 2025 chargesheet are yet to be tried, and no court has recorded any finding of guilt. The former chairman and his wife remain declared proclaimed offenders, a status that turns on their non-appearance and can change if they present themselves before the court. The ED's PMLA inquiry continues in parallel.

The RBI's Section 35A directions were issued for a period of six months from the close of business on 13 February 2025 and were expressly stated to be subject to review; such directions on co-operative banks are commonly extended while the position is assessed, and the administrator appointed by the RBI continues to run the bank. Any recovery for depositors above the DICGC ceiling depends on the resolution of the bank and on the assets the investigating agencies are able to secure and, ultimately, realise.

A chargesheet contains allegations, not findings of guilt; the accused are presumed innocent until proven guilty, and due process continues. Nothing in the public record establishes the charges against any of the named individuals at this stage.

What It Means

The case is a reminder of the difference between the protections that apply to a bank deposit and the risks that sit above them. Deposit insurance through the DICGC covers eligible deposits up to Rs 5 lakh per depositor per bank, and that cover is what stands between a depositor and a co-operative bank in difficulty. Spreading balances so that no single bank holds more than the insured amount is the practical lesson many co-operative-bank episodes have underlined.

RBI directions under Section 35A are a supervisory tool to ring-fence a bank while its position is examined, not a verdict on any individual. When such directions appear, depositors can check the RBI's own press releases for the exact terms, including whether any capped withdrawals are permitted, rather than relying on second-hand accounts. The RBI publishes these orders on its website, and the DICGC sets out the claim process for insured amounts.

For readers following how these matters resolve, Oquilia's enforcement archive tracks Indian regulatory and criminal actions as they move through the system, including related cases such as the SEBI recovery notice in the Sadhna Broadcast matter. None of this is advice to use or avoid any particular institution; it is a description of how the safeguards work.

FAQ

Does the chargesheet mean the accused are guilty?

No. A chargesheet contains allegations, not findings of guilt. The ten accused named by the Mumbai EOW are presumed innocent until proven guilty, the matter is yet to be tried, and due process continues. No court has recorded any conviction in the case.

What exactly did the RBI order?

On 13 February 2025 the RBI issued directions under Section 35A of the Banking Regulation Act, 1949, barring New India Co-operative Bank from fresh lending, investment, borrowing and deposit-taking without approval, and directing that no withdrawals be allowed from depositor accounts, with set-off of loans against deposits permitted. The directions were stated to run for six months, subject to review.

What is a proclaimed offender?

A proclaimed offender is a person a court has formally recorded as having failed to appear despite legal process being issued. It is a procedural order about non-appearance and is not a finding that the person committed any offence. The status can change if the person appears before the court.

Have depositors got their money back?

Eligible depositors are entitled to claim up to Rs 5,00,000 through the DICGC, the RBI's deposit-insurance subsidiary. Amounts above that ceiling are not insured and their recovery depends on the resolution of the bank and on assets the agencies secure. Attached assets are not the same as money returned to depositors.

Where can I read the official record?

The RBI's directions of 13 February 2025 are published on the RBI website. The criminal allegations are contained in the EOW's chargesheet filed before the trial court, which is a document in ongoing proceedings.

This report is based on the Reserve Bank of India press release dated 13 February 2025 imposing directions on New India Co-operative Bank Limited, and on the Mumbai EOW chargesheet reported on the public record, reviewed on 1 August 2026.