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Kotak Mahindra Bank and ATM in Bengaluru, India.IBT Media/SVKrishnamachari

A branch manager of Kotak Mahindra Bank was arrested by the Enforcement Directorate (ED) on Tuesday for alleged involvement in a money laundering case.

The accused has been identified as Ashish Kumar, who was posted with the bank's Kasturba Gandhi Marg branch in New Delhi. He was allegedly involved in a case of fake bank accounts and cash deposits worth Rs 34 crore since the Narendra Modi government's demonetisation drive, Press Trust of India reported.

Also read: Kotak Mahindra Bank Q1 net profit rises sharply on higher NII

"The manager has been arrested under the provisions of the Prevention of Money Laundering Act and will be produced before the court for further custody. With reference to the ongoing investigation of the said accounts, Kotak Mahidra Bank had proactively informed Financial Intelligence Unit and the bank has already suspended the services of its employee Ashish Kumar," the bank was quoted as saying by PTI.

On its part, Kotak Mahindra Bank said that it has "zero tolerance" towards employees not adhering to its code of conduct, and that it would take strict action.

According to media reports, Delhi Police had arrested two men last week for depositing Rs 34 crore in fake accounts operated at the Naya Bazaar branch of Kotak Mahindra Bank in New Delhi.

Ever since PM Modi announced the ban on Rs 500 and Rs 1,000 notes across the country on November 8, there have been several cases of the Income Tax Department seizing cash running into crores of rupees.

The Kotak Mahindra Bank stock was trading at Rs 714 at around 1.20 pm on Wednesday, up 0.32 percent from its previous close on the Bombay Stock Exchange.