“The CBI registered a case today (Thursday) on a complaint by Union Bank of India against Totem Infrastructure and its promoters and directors Tottempudi Salalith and his wife Tottempudi Kavita of Hyderabad,” a person familiar with the developments said.

Since most banks have tightened their lending to diamond merchants and others are in the process of doing so, many medium and small diamond dealers are approaching large players for credit facility within the industry.

“The RBI is expected to call a meeting soon to resolve the issue between the banks,” a source said, requesting anonymity.

The framework facilitates banks in breach of risk thresholds for identified areas of monitoring, such as capital, asset quality (tracked in terms of the net Non-Performing Assets ratio) and profitability, to take corrective measures in a timely manner, in order to restore their financial health.

The regulator is ratcheting up pressure on lenders, increasing its scrutiny and laying down deadlines for them to fix gaps in their systems, in the aftermath of the country's biggest bank fraud.

While the firms have not named Punjab National Bank (PNB) as a creditor, the bank still has legal options, according to bankruptcy law experts.

CBI sources expressed surprise that the scam continued from 2011 to 2017-2018 without detection by the top brass of the state-run bank although certain inconsistencies had been flagged in the audit reports.

The rate hike, effective immediately, comes a day after the bank raised its deposit rates by as much as 50 basis points (bps) across various maturities.

Internal Chief Auditor (retd) Bishnubrata Mishra, who was responsible for concurrent audit for the period 2011-2015 at PNB Brady House branch, was arrested on Thursday, the agency said.

In a clarification issued by the bank, PNB said that it had transferred a total of 1,415 employees since February 19.