Franco Mulakkal, 54, was formally detained on Friday after police questioned him for three days in the southern city of Kochi.
The Vatican had Thursday divested Mulakkal, who was the bishop of the Jalandhar diocese of Missionaries of Jesus despite shedding his administrative role, of his pastoral responsibilities "temporarily".
The police in this regard have said that they are under no pressure to refrain from arresting the Bishop if he were to be found guilty after the interrogation. He was questioned for 7 hours by the Kerala police SIT on Wednesday.
Earlier this month, she alleged that the bishop was using "political and money power" to "bury" the case and was seeking his removal in a fourth letter to the Vatican's representative in New Delhi.
Police had sought a legal opinion as to whether Mulakkal, whose anticipatory bail plea is pending before the high court, could be arrested.
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"With reasonable suspicion, the investigating officer has been convinced about the charges framed against the bishop".
Following the allegations, dozens of nuns, activists and advocates have protested outside a court demanding his prosecution.
"In my absence, Mathew Kokkandam will administer the diocese as in the normal practice when I am away", bishop Mulakkal said in a September 13 circular, reported NDTV. The nun had claimed that most of the times it was unnatural sex. Mulakkal, who holds a doctorate in moral theology, is the first Indian Catholic bishop to be arrested in a rape case.
The Vatican's decision was welcomed by the nuns protesting against Mulakkal, reported PTI.
The nun has accused the senior Catholic priest of sexually assaulting her repeatedly between 2014 and 2016, allegations denied by the clergyman who has pleaded innocence. She said she had to approach police because church authorities did not act on her complaints. The bishop tried to trap our sister (who accused him of rape) in fabricated cases and threatened her with dire consequences if she complained against the abuse, " said Sister Anupama, one of the protesting nuns.