CSR Fund Misuse: Accused Admits to Rs. 15 Crore Fraud in New India Cooperative Bank Case

The New India Cooperative Bank scam is a stark reminder of greed’s reach. It’s a tale of betrayal, ingenuity, and the dark side of corporate goodwill.

MUMBAI (India CSR) – In a dramatic turn of events, the Economic Offences Wing (EOW) of Mumbai Police has uncovered a significant breakthrough in the Rs. 122 crore New India Cooperative Bank scam. Rajiv Ranjan Pandey, arrested from Bokaro, Jharkhand, has confessed to misusing Rs. 15 crore in Corporate Social Responsibility (CSR) funds. This revelation shines a spotlight on the misuse of CSR initiatives, originally intended for social good, in one of Mumbai’s most audacious financial frauds.

The New India Cooperative Bank serves around two lakh account holders. With 28 branches—most in Mumbai, plus outposts in Pune and Surat—it’s a trusted institution for many. The scam has sparked outrage among depositors, who fear for their savings. The RBI has imposed restrictions on the bank, superseding its board.

Pandey, aged 45, is the eighth accused nabbed in this sprawling investigation. His arrest marks a pivotal moment in unraveling the complex web of deceit surrounding the bank’s missing Rs. 122 crore. During intense interrogation, Pandey admitted to receiving Rs. 15 crore from the scam’s masterminds, Hitesh Mehta and Unnathan Arunachalam. He funneled this money into multiple companies under the guise of CSR investments, promising a staggering 50% higher return.

The EOW alleges that these profits were siphoned back to Mehta and Arunachalam.

“This misuse of CSR funds—a mechanism designed to support community welfare—raises serious questions about oversight and accountability in corporate philanthropy. Pandey’s confession exposes how legitimate business practices were twisted into tools for financial crime.”, Rusen Kumar, the Founder of India CSR, a prominent CSR media and watchdog platform, said.

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The Arrest: A Tense Standoff in Jharkhand

Pandey’s capture was no easy feat. A special EOW team tracked him to Bokaro, where he runs a hotel business. When officers moved in, Pandey resisted. He raised an alarm, rallying local residents to his aid in a bid to escape. The situation grew tense, but his brother, Nandkumar Tripathi, intervened. Tripathi escorted Pandey to the Bokaro Steel Police Station, where he finally surrendered.

There, under questioning, Pandey cracked. He admitted to his role in the scam. He confirmed receiving Rs. 15 crore from Arunachalam. He also revealed earning a commission on the illicit profits. This confession ties him directly to the criminal conspiracy that bled the New India Cooperative Bank dry.

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The CSR Connection: A Scheme Unfolds

The scam’s CSR angle is particularly shocking. Pandey disclosed that he and three associates traveled to Mumbai to meet Mehta and Arunachalam. In that meeting, he pitched a lucrative deal. He promised to invest the stolen funds in companies with available CSR budgets. These firms, lured by the prospect of high returns, became unwitting conduits for the scam.

Mehta, the bank’s former general manager, secretly withdrew Rs. 15 crore from the bank’s coffers. He handed it to Arunachalam, who then passed it to Pandey at his office. The money flowed into these CSR-linked companies, generating profits that were funneled back to the main accused. Pandey’s commission was his reward for orchestrating this scheme.

EOW sources say the investments were carefully chosen. The companies targeted had robust CSR programs, making them ideal fronts. The promise of 50% returns was a bait few could resist. Yet, behind this façade of corporate responsibility lay a calculated fraud.

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Court Appearance: Five Days to Dig Deeper

On Sunday, March 23, Pandey faced a holiday court in Mumbai. The EOW presented their case, emphasizing the need to trace the Rs. 15 crore. They aim to identify the companies involved and calculate the profits generated. The police also want to locate Pandey’s three associates, who remain at large.

The prosecution sought seven days of custody. They argued that Pandey’s cooperation was critical to mapping the money trail. The court, however, granted five days, remanding him until March 28. This window gives investigators a tight deadline to unearth more details in this evolving case.

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The Bigger Picture: Rs. 122 Crore Vanishes

The New India Cooperative Bank scam first came to light on February 12, 2025. A Reserve Bank of India (RBI) inspection revealed a staggering Rs. 122 crore missing from the bank’s vaults. The Prabhadevi branch alone lost Rs. 112 crore, with another Rs. 10 crore vanishing from Goregaon. The discovery triggered a swift response from the EOW, which has since arrested eight suspects.

Hitesh Mehta, the bank’s former general manager, is considered the mastermind. He allegedly siphoned off the funds over years, exploiting his position. Unnathan Arunachalam, a key accomplice, facilitated the transfer of money to Pandey and others. The scam’s scale—spanning multiple branches and years—points to a meticulously planned operation.

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CSR Misuse: A Growing Concern

Pandey’s admission highlights a disturbing trend: the exploitation of CSR funds. These funds, mandated under India’s Companies Act, 2013, require firms to allocate 2% of their profits to social causes. Education, healthcare, and poverty alleviation are typical targets. Yet, in this case, CSR became a vehicle for fraud.

Rusen Kumar, Founder of India CSR, a leading media and watchdog platform dedicated to corporate social responsibility, emphasized that such incidents of fund misuse threaten the very foundation of corporate philanthropy. “CSR is a powerful way for social transformation,” he stated. “When funds meant for the welfare of society are diverted or misused, it not only harms the intended beneficiaries but also deeply erodes public trust in the CSR ecosystem. This case highlights the urgent need for greater transparency, stronger accountability mechanisms, and stricter monitoring to ensure that CSR funds are used ethically and effectively.”

According to the media report, the EOW is now probing the companies Pandey named. Were they complicit, or merely pawns? How much profit did they generate, and where did it go? These questions are central to understanding the scam’s full scope.

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Pandey’s Profile: From Hotelier to Fraudster

Pandey’s background adds another layer to the story. A hotel owner in Bokaro, he leveraged his business acumen to join the scam. His name emerged during Arunachalam’s interrogation, prompting the EOW’s Jharkhand mission. His resistance to arrest suggests he knew the gravity of his actions.

His three associates, still absconding, are believed to have played supporting roles. They accompanied him to Mumbai, helping pitch the CSR investment scheme. The EOW is intensifying efforts to track them down, suspecting they hold key information.

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The Investigation: A Race Against Time

With Pandey in custody until March 28, the EOW faces pressure to deliver results. Tracing Rs. 15 crore across multiple companies is no small task. Identifying the profits and their recipients is even harder. The police are also examining Pandey’s financial records, hoping to uncover more leads.

The broader Rs. 122 crore scam involves other arrested suspects, including the bank’s former CEO, Abhimanyu Bhoan, and developer Dharmesh Paun. Each arrest has peeled back layers of the conspiracy. Yet, much remains unknown. How did Mehta withdraw such vast sums undetected? What role did the bank’s oversight failures play?

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Public Outrage: A Bank Betrayed

This move aims to stabilize operations, but public confidence is shaken. “How could this happen under the RBI’s nose?” asked a depositor. “We need answers.”

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RBI Permits Rs. 25,000 Withdrawal for Depositors

The Reserve Bank of India (RBI), through an official communication, has allowed depositors of New India Co-operative Bank Limited, Mumbai, to withdraw up to ₹25,000 from their accounts starting February 27, 2025. This relief comes after stringent restrictions were imposed on the bank earlier this month under All-Inclusive Directions (AID).

The Reserve Bank of India on February 13, 2025, had imposed AID on New India Co-operative Bank Limited, Mumbai. As per the directions, the bank was instructed not to allow withdrawal of any amount from savings bank, current accounts, or any other account of a depositor. The sudden imposition created concern among depositors as it completely restricted access to their funds.

Following the imposition of AID, the Reserve Bank superseded the bank’s Board and appointed an Administrator and a Committee of Advisors (CoA), as officially announced via press release dated February 14, 2025. This step aimed to ensure professional oversight and stabilize the governance of the troubled bank.

After a detailed review of the bank’s liquidity position in consultation with the Administrator, the Reserve Bank has now decided to ease the restrictions and permit deposit withdrawals of up to Rs. 25,000 (Rupees Twenty Five Thousand only) per depositor. This relaxation will become effective from February 27, 2025. According to RBI’s Chief General Manager, Puneet Pancholy, more than 50 per cent of the total depositors will be able to withdraw their entire balances under the new limits, while the remaining depositors will be allowed to withdraw up to Rs. 25,000 from their accounts. Withdrawals can be made using both the bank’s branches and ATM channels. However, the total withdrawal per depositor will be limited to Rs. 25,000 or the available balance in their account, whichever is lower.

In another significant development, the Reserve Bank has reconstituted the Committee of Advisors (CoA) to the Administrator with effect from February 25, 2025. The newly formed CoA comprises:

• Ravindra Sapra, former General Manager, State Bank of India
• Ravindra Tukaram Chavan, former Deputy CGM, Saraswat Co-operative Bank Ltd.
• Anand M Golas, Chartered Accountant

There has been no change in the position of the Administrator, Shri Shreekant, who continues to oversee the bank’s operations under RBI guidance.

The Reserve Bank has reiterated that it is closely monitoring all developments and will continue to take necessary measures to safeguard the interests of depositors.

(Copyright@IndiaCSR)