Hitesh Mehta, ex-general manager of New India Co-operative Bank, has confessed to police officials on how he siphoned off Rs 122 crore from the Mumbai-based bank.

Mehta, according to police officials, used to call two staffers and instruct them to hand over Rs 50 lakh at a time from the bank's safes to persons he sent.

Mehta and real estate developer Dharmesh Paun have been in custody since Sunday in connection with the alleged embezzlement of Rs 122 crore from the bank that was uncovered following an inspection by the Reserve Bank of India (RBI).  

The Economic Offences Wing (EOW) of the Mumbai police is probing the case.  

Mehta had access to the bank's safes as he was the custodian.   

According to recorded statements of two bank staffers, they used to give cash to those sent by Mehta. These bank staffers, who are witnesses in the case, have said they handed Rs 50 lakh cash more than once to several persons, news agency PTI quoted a police official as saying.

The probe so far has found that a former employee of the lender wrote to RBI about the prevailing situation, he said, adding this information is being verified with the RBI.

Authorities were aware the bank was in an unhealthy state since non-performing assets (NPAs) were rising following the disbursal of money to ineligible persons, the official said.

Considering the bank's situation in the last two years, we are probing why the misappropriation of funds was not pointed out in audits. We have started recording statements of those who conducted the audits. While cash as per the books was Rs 138 crore, an RBI inspection found Rs 122 crore of this missing from two safes of the bank. The EOW is verifying if the money went missing at one go, the official told PTI.

The official said the statement of Abhijeet Deshmukh, a partner of the chartered accountancy firm involved in the bank's audit, was recorded by EOW at the commissionerate in south Mumbai.

The statement of the bank's former CEO Abhimanyu Bhoan was recorded on Wednesday, He was called again today as part of the probe. Meanwhile, accused Unnathan Arunachalam alias Arun Bhai, to whom Mehta gave Rs 50 crore, is still absconding, the official said on Thursday.

In a new development on Friday, former chief executive officer of New India Co-Operative Bank, Abhimanyu Bhoan, has been arrested by the EOW of Mumbai police. This is the third arrest in the case, after Mehta and developer Dharmesh Paun.

Bhoan had been called to record his statement on Thursday and Friday. After his role in the crime became apparent during the interrogation, he was placed under arrest late Friday night, said an EOW official.