Mumbai: Gokulnath Shetty, who was in charge of the import section of the Punjab National Bank branch where the Rs 11,400-crore fraud unfolded, has been arrested by the CBI.

Manoj Kharat, a current employee of the bank, and Hemant Bhat, an authorised signatory of Nirav Modi's group, have also been arrested. The trio have been sent to CBI custody for 14 days.

The scam has "consequences for the economy of the nation", said special CBI judge S.R. Tamboli. "It's a very serious offence."

Defence lawyers contended that the beneficiaries of the scam were somewhere else.

In two complaints, PNB had accused Shetty and Kharat of issuing fraudulent instruments to firms linked to Nirav and his uncle Mehul Choksi. Shetty had been posted at the PNB branch as a deputy manager from March 31, 2010, and retired on May 31, 2017. The CBI searched the branch on Saturday.