Mumbai Police’s Economic Offences Wing (EOW) arrested Dharmesh Paun, a private developer from Kandivali, on Sunday, in connection with the Rs122-crore scam involving the New India Co-operative Bank. Paun allegedly received Rs70 crore from Hitesh Mehta, the bank’s General Manager and account head, who was arrested the previous day. Mehta, who had worked with the bank since 1988 and was set to retire next year, allegedly misappropriated the funds for investment purposes.
Both Paun and Mehta were produced before the Esplanade Court on Sunday and remanded in police custody until February 21.
The scam was uncovered during a routine audit at the bank’s headquarters in Prabhadevi on Wednesday when officials from the Reserve Bank of India (RBI) discovered a Rs122 crore shortfall from the vault. Later that evening, Mehta confessed to RBI officials that he had been siphoning money from the bank’s vaults at both its Prabhadevi and Goregaon branches since the pandemic. He also disclosed that he had invested the stolen funds with people he knew, including Paun.
While Mehta was arrested on Saturday, the investigation revealed that he had given around Rs70 crore to Paun for real estate investments. Paun had previously bought a flat through Mehta several years ago. The funds were allegedly channeled to another individual, Unnanathan Arunachalam, also known as Arunbhai, who remains absconding.
According to police, Mehta had invested substantial amounts in Paun’s real estate firm, including Rs59 lakh in January 2025 and Rs1.75 crore in mid-2024. There are also indications that Mehta invested an additional Rs40 crore with Arunbhai, an electrical contractor.
In the court hearing, the public prosecutor argued that the remand of both Mehta and Paun was essential to uncover the full extent of the scam and to identify any other individuals, either within or outside the bank, who may have been involved. The prosecutor highlighted that the scam had affected the public, as many individuals had deposited funds with the bank.
Meanwhile, the Reserve Bank of India (RBI) intervened by imposing restrictions on the bank’s operations. On Thursday, the RBI issued a directive preventing the New India Co-operative Bank from granting or renewing loans, accepting deposits, or disbursing payments without prior approval. In another statement on Friday, the RBI took control of the bank’s operations, replacing its board of directors and appointing Shreekant, former chief general manager of the State Bank of India, as the administrator for a 12-month term.
