Reserve Bank of India official K Michael, posted here, was arrested by CBI while he was allegedly trying to convert Rs 1.51 crore of old currency notes.
CBI sources said Michael, a senior special assistant at RBI, was arrested last week.
The agency has also arrested Veerendra in a separate case relating to seizure of Rs 5.70 crore of new currency from the bathroom of the casino owner by the Income Tax department.
Besides Veerendra, midddlemen Thipeswamy and Venkatesh, residents of Chitradurga districts of Karnataka, and unknown officials of four banks -- State Bank of India, State Bank of Mysore, ICICI Bank and Kotak Mahindra have also been named in the FIR in this case.
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The bank officials in a criminal conspiracy with Veerendra exchanged Rs 5.76 crore of demonetised notes with the new currency of Rs 2000 and Rs 500 denomination during November and Decemeber 2016, the CBI FIR alleged.
It was alleged that the bank officials falsified the accounts of their bank on the basis of forged and fabricated documents of identity and address proof in the names of several individuals to misrepresent that the new currency notes have been exchanged with the general public through the bank counters and and ATMs of the banks.