The opposition is also gunning for Mr Bansal, demanding his resignation.
Here are some of the reactions after the story broke.
Pawan Bansal, Union Railway Minister (in a press statement )
I have always observed highest standard of probity in public life and look forward to an expeditious investigation by CBI in the matter.
Derek O'Brien: Trinamool Congress leader: The prime minister is silent after all this. There has to be some responsibility, some accountability. Why only railways, what about the law minister, the coal minister? This government has lost every moral right to rule the country.
Sharad Yadav, JD(U) President: This is not a serious issue. The man giving and taking the bribe have both been arrested. What has Pawas Bansal got to do with this? I don't think Mr Bansal will indulge in something like this. I know him since several years. Let the CBI interrogate him.
Dinesh Trivedi, Senior Trinamool leader, former railway minister: I know Pawan Bansal, he appears to be honest but it's about accountability and morality. Pawan Bansal should step aside till probe over, but the rot is deep within the system.
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.