Encounter specialist Daya Nayak was on Monday suspended from service.
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"Sub Inspector Nayak has been suspended following the communication from the anti-corruption bureau (ACB) to take action against the officer," Joint Commissioner of Police (Law & Order) Arup Patnaik said.
The ACB had raided Nayak's police quarters at Kandivli in Mumbai North on late Friday evening for having amassed wealth disproportionate to his known sources of income.
Nayak, however, was not at his residence when the ACB officers went there twice over the weekend. They have questioned his wife Komal.
The ACB raids followed complaints by former journalist Ketan Tirodkar that the encounter specialist had connections with the underworld and had amassed huge assets.