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Justice S S Jadhav granted the bail to Agarwal and former executive of the bank B K Batra on sureties of Rs one lakh each.
The CBI, which arrested them along with seven others on January 23, failed to explain why it needed the two accused to stay in prison after it had filed the charge sheet in the case, the judge said.
Agarwal and Batra are accused of having shown "undue favours" to the now-defunct Kingfisher Airlines owned by Vijay Mallya.
They sanctioned loans worth over Rs 1,000 crore to the airline despite its "weak financial record", CBI said.