MUMBAI (REUTERS) - Indian police arrested the chairman of mid-sized state-run lender Syndicate Bank Ltd late on Saturday over allegations of taking bribes to grant loan extensions to a company, a police spokeswoman said.

The Central Bureau of Investigation, India's top crime-fighting agency, has filed a case against Syndicate Bank Chairman Sudhir Kumar Jain and 11 others, including two directors of a Delhi-based company, and is further investigating the allegations, it said in a statement.

"It is alleged that the said public servant has been indulging into negotiations for illegal gratification directly as well as through middlemen for extending undue favour to private companies by granting sanction to various financial proposals," the statement said, referring to the bank chairman.

The CBI said it recovered 5 million rupees (S$102,350) that was allegedly being paid to by a private company to the bank's head through middlemen to win extensions on loans after defaulting on repayments.

In its statement, the CBI did not name the company that had offered the bribe. Jain could not be reached for comment.

"We've taken him into custody," CBI spokeswoman Kanchan Prasad told Reuters on Sunday. Jain will be produced before a court on Monday, she said.

The CBI said it searched 20 locations in four cities and found "incriminating documents" related to the case. It also found cash, jewellery and property documents from Jain's house, the agency said.

Rising bad loans are a concern for Indian banks. Stressed loans in India, those categorised as bad or restructured, total US$100 billion (S$125 billion), or about 10 percent of all loans.

Last year, the CBI investigated a senior executive of top lender State Bank of India for allegedly taking bribes to facilitate loans to a company.