Financial Services Secretary G S Sandhu said the Finance Ministry received a preliminary report from the CBI on the arrest of Jain on Saturday, based on which he was suspended.
Jain, 54, was appointed CMD of state-owned Syndicate Bank in July last year for a period of five years. He was one of the youngest CMDs of a public sector bank and was due to retire in 2020.
"We have suspended him (S K Jain) and two executive directors (EDs) have been given charge of the bank as an interim arrangement," the Secretary told PTI.
M Anjaneya Prasad and T K Srivastava are the two EDs of the Bangalore-based bank.
Jain, along with seven other accused were yesterday remanded in CBI custody for four days as the agency plans to probe various other angles into the case that may emerge from the telephonic transcripts of the official and conduits.
After completing necessary formalities, the CBI placed Jain and seven others -- Chairman-cum-Managing Director of Prakash Industries Ved Prakash Agarwal and Director Vipul Agarwal, Chartered Accountant Pawan Bansal, Vineet and Puneet Godha (relatives of Jain), Vijay Pahuja and Pankaj Bansal under arrest.
Jain was arrested by CBI on Saturday for allegedly negotiating with Bhushan Steel for an illegal gratification of Rs 50 lakh in return for granting credit extension to that company as it had defaulted on the payment of loan installments amounting to crores of rupees to the bank.
Vice Chairman of the company Neeraj Singhal, who is named in the FIR and is since absconding, is alleged to have made the payment through a conduit Purushotam Totlani to Vineet Godha, brother-in-law of Jain. The conduit is also absconding and the CBI hopes to nab them soon.
CBI claimed to have recovered cash to the tune of Rs 21 lakh from Jain's residence besides gold worth Rs 1.68 crore and fixed deposits of up to Rs 63 lakh.
The entire racket was busted after CBI monitored the activities of Jain for last six months.
The highly secretive operation, which was being monitored by CBI Director Ranjit Sinha, came to an end after the alleged "deal" was being struck by the company with the bank CMD.
CBI has registered two cases against Jain and 11 others, including CMD and Directors of two private firms based at Delhi -- Bhushan Steel and Prakash Industries -- in a bribery case under relevant sections of Prevention of Corruption Act, 1988 and criminal conspiracy.
Efforts to get a reaction from either of the two companies did not fructify as Bushan Steel refused to comment and Prakash Industries said there was no one for media liaison.
Sinha, who has been at the forefront of fighting corruption at high places, has been personally monitoring the case and searches that were being conducted by its sleuths since yesterday morning at 20 places in Delhi, Mumbai, Bangalore and Bhopal and continued till late this morning.
In this case, CBI alleged that the conduit was the brother-in-law of the CMD and the deal was struck by the chartered accountant who has started his own firm of providing loans to big corporate houses.