Hyderabad, March 22 (IANS): The CBI has arrested two senior State Bank of India (SBI) officials for misappropriating funds of around Rs 12.40 lakh by violating the RBI guidelines imposed during demonetisation, an official said on Wednesday.

Senior Special Assistant M. Sultan Mohiuddin and Deputy Manager (Operations) I.J. Raja Sekhar, employed at SBI's Buchireddypalem branch in Andhra Pradesh's Nellore district, were held during a raid conducted at their official and residential premises on Tuesday. 

The Central Bureau of Investigation also recovered several incriminating documents.

A CBI official said the bank officials were booked for criminal conspiracy, cheating, criminal breach of trust and under the Prevention of Corruption Act.

"It was alleged that the officials entered into a criminal conspiracy with some private persons between November 15 and 25 when demonetisation was in force and restrictions on distribution of currency notes were in place," said the official.

He said Mohiuddin had allegedly availed four gold loans of Rs 9.70 lakh on "benami" names. These were sanctioned by Sekhar.

"The SBI officials also sanctioned three more gold loans to other persons to the tune of Rs 2.70 lakh and made the loan disbursements in cash in new currency exceeding the limits laid down by the Reserve Bank of India (RBI) due to demonetisation. 

"Subsequently, two benami gold loans were closed on November 21, 2016 and November 25, 2016 by depositing demonetised currency notes of Rs 1,000 and Rs 500. Thus, the accused abused their official position and misappropriated funds to the tune of Rs 12.40 lakh," the CBI officer said.