Mr Banda last week appeared before an official panel to answer allegations of corruption.
The allegations relate to his three years in charge of Africa's biggest copper producer.
Mr Banda has been accused of misappropriating more than $11m (€8.4m) during his three years in office.
He has been released on a bond and will appear in court today.
Zambia this month stripped Mr Banda of immunity from prosecution, a sign it was getting closer to bringing formal charges against him.
Mr Banda, who led Africa's top copper producer from 2008 to 2011, has maintained his innocence.
The former president was questioned for nearly three hours after his arrest, his lawyer Sakwiba Sikota said, adding that Mr Banda had done nothing wrong.
Mr Banda later appeared before supporters telling them to remain calm and that he would win his case in court.
He was defeated in 2011 by rival Michael Sata, whose government has launched several high-profile corruption probes into deals struck by the former administration.