Firestar Group vice-president Shyam Sunder Wadhwa, a confidant of Nirav Modi, was arrested by the Enforcement Directorate on Wednesday, an official said.
Wadhwa was arrested after questioning in Mumbai on Tuesday night, the ED official said, adding it was the first arrest by the agency in the case.
According to the sources, Wadhwa was accused of conducting fraudulent transactions with Firestar International and Firestar Diamond International owned by Nirav Modi, who along with his group companies -- Diamond R US, Stellar Diamond and Solar Exports -- and others have been implicated in the Rs 13,500 crore scam which was admitted by the PNB in February, leading to a massive upheaval in the country's banking system.
The ED on March 24 seized valuables worth over Rs 36 crore belong to Modi and also carried out joint searches with the Central Bureau of Investigation (CBI), which is also probing criminal misconduct in the case, for over three days at Nirav Modi's palatial 'Samudra Mahal' residence in Mumbai.
The move is part of money trail probe by the ED and CBI after cases were registered against Nirav Modi and his business partner and uncle Mehul Choksi, owner of Gitanjali Group, for defrauding PNB.
Nirav Modi and Choksi fled the country in January around a month before the PNB filed its first complaint against them with the CBI. They are still at large.
So far, the ED carried out searches at 251 properties across the country and seized diamonds, gold, pearls and precious and semi-precious stones.
The ED also claimed to have attached immovable properties belonging to their business groups to the tune of Rs.7,638 crore.
(With input from agencies)