Solaisamy (55), who was working as a manager at branches of Indian Bank at Vembangudi and Manameludi in the district during the period was arrested last night, they said.
He allegedly provided loans for the jewels and had swindled money by showing on record short-term loans for bogus account holders, using fake addresses.
The fraud came to light during an audit. The Tiruchirapalli Zonal Manager R Selvaraj filed a complaint following which he was arrested, police said.
Two bank staffs, who reportedly helped the manager in the fraud are absconding and a search is on to nab them, police added.