However, Parekh, who defaulted the bank of Rs 380 crore (Rs 3.8 billion) received a fortnight's time beginning last Saturday to seek a stay on the order.

If the higher court does not grant a stay on his application, it will lead to his arrest. Bank officials said on Tuesday that while MMCB welcomes repayment of defaults by Parekh, the real motive behind the move remains to be seen.

Parekh had paid back only Rs 22 crore (Rs 220 million) between August 2001 and August 2004. Asked if the possible arrest of Parekh will speed up the recovery process, MMCB chief executive officer B K R Maruthy, said on Tuesday that it is only a case of arresting a defaulter.

"The CBI has also subscribed to this view and hence has cancelled the conditional bail of Parekh," said Maruthy.

The Reserve Bank of India suspended MMCB from the clearing house in March 2001, after a preliminary inquiry revealed that the bank was facing a liquidity crunch and was in the eye of the pay order scam involving Parekh.

Parekh, who was expected to pay back Rs 380 crore to the bank by August this year, had repaid only Rs 22 crore. With the payment in the last two months, the total repayment stands at Rs 40 crore (Rs 400 million).

MMCB has hastened its recovery process after the Central government extended the time frame of its revival package by one year. The previous revival package of the bank was scheduled to expire on August 24, 2004.