PNB has accused two low-level employees of the Brady House branch - where Sharma also worked - of issuing the LOUs without making corresponding entries in the bank's main software, helping the fraud go undetected for years.
The CBI official said that Sharma would be produced in a court in Mumbai on Thursday.
The Central probing agency a few days ago had summoned Nirav Modi via emails and asking him to appear before it to join the investigation but the business tycoon according to reports has not shared any details about his location or any other information.
Pro-Turkish Forces Seize Major Part of Kurdish Jindires Town in Afrin
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"In reply to the CBI's mail, the diamond jeweller showing helplessness said that he can't join the probe as he has some pending business overseas".
Nirav Modi has refused to join the CBI investigation in the United States dollars 2 billion fraud in Punjab National Bank citing his business engagements, prompting the agency to issue a stern letter today asking him to appear before it next week. The agency again wrote to him to immediately approach the high commission of the country where he is now present and ensure his return as soon as possible.
"CBI is now probing Rs 12,636 crore which is (Nirav and Gitanjali) PNB scam, up from Rs 11,421 crore", said CBI.
The CBI had filed the first FIR in the scam on February 14 against Nirav Modi, his wife Ami, brother Nishal, uncle Choksi and his firms Diamond R US, Solar Exports and Stellar Diamond. Both Choksi and Modi are said to have left the country before criminal cases were lodged against them.
The Enforcement Directorate attached 41 properties worth Rs 1,200 crore of Nirav's uncle Mehul Choksi of the Gitanjali Group.