RBI supersedes New India Co-operative Bank board amid EOW probe

What the Record Shows

The Reserve Bank of India placed New India Co-operative Bank Ltd., Mumbai under All-Inclusive Directions with effect from the close of business on 13 February 2025, invoking Section 35A read with Section 56 of the Banking Regulation Act, 1949. Per the RBI press release of that date, the bank was directed "not to allow withdrawal of any amount" from a depositor's accounts, and barred from granting or renewing loans, making investments, incurring liabilities or disbursing payments without the regulator's prior written approval. The directions were stated to remain in force for six months, subject to review, with eligible depositors covered by deposit insurance up to Rs 5 lakh under the DICGC Act, 1961.

A day later, on 14 February 2025, the RBI superseded the bank's board of directors for twelve months and appointed an administrator, Shri Shreekant, a former Chief General Manager of the State Bank of India, assisted by a committee of advisers. The regulator said the action was taken in the interest of depositors and on supervisory concerns; the RBI order itself named no individual.

Separately, the Mumbai Police Economic Offences Wing (EOW) registered a first information report on a complaint by the bank, alleging that its then general manager and head of accounts, along with others, conspired to misappropriate around Rs 122 crore from the bank's safes. That figure and the individual names come from the FIR — allegations, not findings. No court has convicted anyone in the matter.

How It Worked

According to the EOW FIR, cash was allegedly removed from the strong rooms of the bank's Prabhadevi and Goregaon offices over roughly five years, between 2020 and 2025, and the shortfall concealed in the bank's books. The complaint alleges the removal was detected not by internal audit but during an RBI inspection that physically verified cash balances against the ledgers.

The EOW arrested Hitesh Mehta, described in the FIR as the bank's general manager and head of accounts, in February 2025. Per police statements reported at the time, he was questioned for several hours before arrest, and the EOW alleges he had withdrawn funds since 2020. A second person, real-estate developer Dharmesh Paun, was arrested in connection with the case; the EOW alleges that about Rs 70 crore of the diverted money was routed to him for a slum-rehabilitation project in Kandivali. These are the agency's allegations and remain to be tested at trial.

The chronology on the regulatory side ran in parallel. After imposing the freeze on 13 February 2025 and superseding the board on 14 February 2025, the RBI relaxed the withdrawal bar on 24 February 2025, permitting depositors to withdraw up to Rs 25,000 each with effect from 27 February 2025 — a limit the regulator said would allow more than half the depositors to withdraw their entire balances. The committee of advisers was reconstituted on 25 February 2025.

The Enforcement Directorate subsequently took up a money-laundering angle under the Prevention of Money Laundering Act, examining whether proceeds of the alleged misappropriation were layered through third parties. As with the EOW case, the ED's involvement is an investigation; no adjudication of money laundering has been recorded.

Who Lost Money

The people most directly affected were the bank's retail depositors across its Mumbai and Thane branches, who were frozen out of their savings, current and other accounts from 13 February 2025. The bank reported deposits of about Rs 2,436 crore as of 31 March 2024, so the freeze touched a far larger base than the Rs 122 crore shortfall alleged in the FIR.

The graduated relief that followed softened the immediate hardship for smaller depositors: the Rs 25,000 withdrawal window from 27 February 2025, and deposit-insurance cover of up to Rs 5 lakh per depositor under the DICGC framework, meant that the majority of account-holders — those with modest balances — could access their money. Depositors with balances above the insured ceiling faced a longer wait, dependent on the bank's revival or resolution.

How much of the alleged Rs 122 crore has actually been traced or recovered has not been established on the public record. That figure is the sum the EOW alleges went missing, not a quantified loss to any identified depositor, and the deposit base itself was ultimately protected through the route described below.

Where It Stands Now

The most important development since early 2025 is that New India Co-operative Bank no longer exists as an independent entity. On 1 August 2025 the RBI approved the voluntary amalgamation of the bank with Saraswat Co-operative Bank Ltd., Mumbai, exercising powers under sub-section (4) of Section 44A read with Section 56 of the Banking Regulation Act, 1949. Per the RBI press release, "all the branches of New India Co-operative Bank Ltd., Mumbai will function as branches of Saraswat Co-operative Bank Ltd., Mumbai with effect from August 04, 2025." The amalgamation route matters for depositors, because it typically transfers deposit liabilities to the acquiring bank rather than leaving account-holders to a deposit-insurance payout alone.

On the criminal side, the EOW has filed a chargesheet naming ten accused over the alleged Rs 122 crore shortfall, and courts have declined bail to the principal accused, citing the size of the sums involved. The matter is at the trial stage, and the charges are yet to be tested in evidence.

A chargesheet and an FIR contain allegations, not findings of guilt. The persons named are presumed innocent until proven guilty, and due process continues. Nothing on the record amounts to a conviction, and the RBI's supervisory orders record supervisory concerns rather than any adjudication against a named individual.

What It Means

The case is a reminder of how India's depositor-protection architecture is meant to work in layers. The first line is supervisory: the RBI's power under Section 35A to freeze a bank's operations exists precisely to stop further outflows while the position is assessed. The second is insurance: DICGC cover of up to Rs 5 lakh per depositor, which the RBI cites in almost every such direction. The third — and the one that spared this bank's depositors the worst outcome — is resolution, here an amalgamation that moved the accounts to a larger, functioning institution.

For an ordinary saver, the practical takeaways are prosaic but useful. Deposit-insurance cover is per depositor per bank, so spreading large balances across institutions keeps more of your money inside the insured ceiling; a fixed-deposit calculator helps you see how splitting a corpus changes the interest you forgo, if any. It is also worth confirming that a co-operative bank is licensed by the RBI before parking substantial sums with it. None of this is advice to move money in any direction; it is simply how the protections are structured. Readers can follow related actions in the enforcement archive, including our coverage of the SFIO shell-company loan-app complaint.

FAQ

Does this mean the people named are guilty?

No. The Rs 122 crore figure and the names come from a police FIR and chargesheet, which contain allegations, not findings of guilt. The accused are presumed innocent until proven guilty, and due process continues. No court has convicted anyone in this matter.

What exactly did the RBI order?

Per the press release dated 13 February 2025, the RBI imposed All-Inclusive Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949, barring deposit withdrawals and most banking activity without prior approval for six months. It superseded the board on 14 February 2025 and appointed an administrator.

Can depositors still access their money?

Yes, through the amalgamation. The RBI relaxed the freeze to Rs 25,000 per depositor from 27 February 2025, and from 4 August 2025 the bank's branches began functioning as Saraswat Co-operative Bank branches, which ordinarily transfers deposit liabilities to the acquiring bank.

What is the Enforcement Directorate's role?

The ED took up a parallel investigation under the Prevention of Money Laundering Act to examine whether proceeds of the alleged misappropriation were laundered. This is an investigation, and no finding of money laundering has been adjudicated.

How can I check whether a bank is properly licensed?

The RBI publishes lists of licensed banks and co-operative banks on its website, and issues public directions when it restricts a bank. Confirming a bank's licence and reading any RBI directions against it before depositing large sums is a straightforward precaution.

Where can I read the official orders?

The RBI directions, the withdrawal relaxation and the amalgamation approval are all published as press releases on rbi.org.in, linked at the end of this report.

This report is based on the RBI directions dated 13 February 2025, the withdrawal relaxation of 24 February 2025 and the amalgamation approval of 1 August 2025, together with the Mumbai Police Economic Offences Wing filings reported in 2025, reviewed on 2 August 2026.