New India Cooperative Bank scam: 48 borrowers, fake staff booked for ₹2.4 crore loan fraud

According to police, the complaint was filed by Sachidanand Shetty, 62, the current administrative director of the credit society. The fraud came to light after Shetty conducted an internal review and alerted the Economic Offences Wing (EOW) of the Mumbai police

MUMBAI: In a fresh development in the ₹122 crore New India Cooperative Bank scam, the Matunga police have registered a First Information Report (FIR) following a complaint filed by the Konkan Railway Region (Urban) Cooperative Credit Society. The complaint alleges a ₹2.40 crore loan fraud involving 48 borrowers who posed as Konkan Railway Corporation Ltd (KRCL) employees, the society’s former president, and unidentified officials.

Mumbai, India - Feb. 14, 2025: Queues of people were seen outside Mumbai-based New India Co-operative Bank as worried customers want to withdraw their money after the Reserve Bank of India (RBI) on Thursday imposed several restrictions, including on the withdrawal of funds by depositors, amid supervisory concerns at Mulund in Mumbai, India, on Friday, February 14, 2025. (Photo by Satish Bate/ Hindustan Times) (Hindustan Times)

According to police, the complaint was filed by Sachidanand Shetty, 62, the current administrative director of the credit society. The fraud came to light after Shetty conducted an internal review and alerted the Economic Offences Wing (EOW) of the Mumbai police.

The credit society had partnered with New India Cooperative Bank to provide loans to KRCL employees. However, investigations revealed that under the tenure of its former president Abhijit Deshmukh, the society submitted fake employment records for 48 individuals falsely shown as KRCL staff. These individuals secured loans worth ₹2.40 crore, of which ₹2.11 crore remains unpaid.

“Shetty has been the administrative director since 2018. The society was established in 2000 to serve KRCL employees. Due to the limited number of permanent staff—around 450 members—it tied up with New India Cooperative Bank to fulfill loan demands,” said a police officer.

The scam began to unravel in 2022 when the bank issued a notice stating that 48 loans had become Non-Performing Assets (NPAs). As per their agreement, the credit society was responsible for recovering these loans. However, since the borrowers were not actual KRCL employees, the society could not recover the funds through salary deductions.

The FIR also links the ₹2.40 crore fraud to a broader ₹122 crore scam involving the New India Cooperative Bank. The EOW, which received Shetty’s complaint two weeks ago, is already investigating former bank chairperson Hiren Bhanu, who is currently absconding. Bhanu is accused of illegally sanctioning large loans—between 2010 and 2023—to close associates, many of which also turned into NPAs.

Police have registered the case under Indian Penal Code sections 409 (criminal breach of trust), 420 (cheating), 465, 467, 468 (various forms of forgery), 481 (use of a false property mark), and 120B (criminal conspiracy). Further investigation is underway to track the accused and recover the funds.