Police made the arrest seven days after the London Westminster Court issued an arrest warrant against Nirav Modi who left India days before the scam came to light in January 2018.

He will be produced before a court later in the day.

The Interpol had issued a Red Corner Notice against Nirav Modi in July 2018 at the request of the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI).

The businessman's whereabouts were a mystery as he had been spotted in New York, Hong Kong and other cities. Along with his uncle Mehul Choksi of Gitanjali Group, Nirav Modi left the country before the CBI formally started investigating the PNB scam.

The ED had on May 24 and 26 last year filed chargesheets against both men. Non-bailable warrants were also issued against them.

The development came days after the The Telegraph newspaper in Britain claimed that Modi was spotted in London.

Accused in the Rs 13,500 crore PNB fraud case, Nirav Modi was living in a three-bedroom flat, occupying half the floor of the landmark Centre Point tower block, The Telegraph reported.

The report also claimed Nirav Modi was involved in a new diamond business, run from an office in Soho, just a few hundred yards from his apartment. The new business was incorporated in May 2018, it said.

An extradition request against him had been pending before the UK authorities since September last year.

The ED on February 26 attached Rs 147 crore worth of property of Nirav Modi and his associate companies in connection with the PNB case.