District Superintendent of Police D Uday Kumar Reddy said that the accused, P Sripath Kumar, used the money for online betting.
The approvals required for setting up NARCL and IDRCL, including from the RBI, have now been received, lending major SBI said on Friday.
The bad bank has two legs — National Asset Reconstruction Company, to identify, aggregate and acquire stressed assets from lenders, and India Debt Resolution Company to handle the debt-resolution.
"Searches were conducted at the property of the accused in Cuttack and in Dehradun. Further investigation is continuing," said a CBI officer.
Usha Ananthasubramanian was dismissed in August 2018, from Allahabad Bank on the allegation that she failed to exercise proper control over the functioning of PNB while serving as MD of the bank.
Soon after Central Bureau of Investigation (CBI) filed charge sheet in May pointed involvement of top officials of banks, PNB's board decided to divest two executive directors of all powers.
Yesterday, the finance ministry had asked the boards of Allahabad Bank and PNB to take action against Ananthasubramanian and two executive directors of PNB.
The PNB, in a late night filing to stock exchanges, said the scam has swelled by USD 204.25 million.
The wider Nifty50 of the National Stock Exchange shed 73.90 points or 0.71 per cent to close at 10,378.40 points.
Punjab National Bank (PNB), the country's second largest public sector bank, had detected the $1.8 billion fraud in one of its branches in Mumbai.
The fraudulently issued Letters of Undertaking (LoUs) from the Mumbai branch of Punjab National Bank (PNB) were in favour of Hong Kong branches of Allahabad Bank and Axis Bank.