A 43-year-old man working as a gold valuer at a public sector bank has been arrested for allegedly duping it of ₹3.77 crore on the pretext of inspecting the precious metal received from customers, a police official said on Sunday.

Ramaswamy Nadar, a resident of Antop Hill, had been working in the gold loan department of the Indian Bank’s Dharavi branch for the last two years, apart from running his own jewellery shop, he said.

When the bank recently decided to liquidate some of its assets and opened lockers holding gold items in 77 packets, they found the yellow metal to be fake. It then immediately lodged a complaint with the Dharavi police, he said.

“During the probe, the police zeroed in on Mr. Nadar, who, after initially denying any role in the crime, confessed that he had purchased fake jewellery from Dadar and set up 12 dummy customers to cheat the bank. He was arrested on Wednesday,” senior police inspector Suresh Patil said.

“Mr. Nadar’s job was to issue value certificates to those opting for gold loan. He used documents such as PAN and Aadhaar cards to show 12 of his accomplices as customers. These customers then deposited fake gold at the bank and Mr. Nadar fraudulently gave them value certificates,” Mr. Patil said.

An amount of ₹3.77 crore was given as loan against gold to these customers, another police official said. “This money was siphoned-off by Mr. Nadar after giving the dummy customers a small sum,” he said.

Mr. Nadar purchased some property, cars and motorcycles with the amount. “Efforts are under way to recover the money from him. He has been charged under Sections 420 (cheating) and 34 (common intention) of the Indian Penal Code, and a hunt is on for the 12 people who helped him in the crime,” the official said.

Since Mr. Nadar also worked as a valuer with the bank’s branch in Sion, the police are trying to find out if he conducted a similar fraud there too. He has been remanded in police custody till September 17.