3:29 PM PT -- Sounds like Banchero won't be punished over Sunday's incident -- at least not yet -- he's in the starting lineup for the Blue Devils as they take on Gardner-Webb Tuesday night.
Mike Krzyzewski's grandson -- a member of the Duke U basketball team -- was busted for DWI early Sunday morning ... along with his future NBA star teammate, Paolo Banchero, who was also cited for aiding and abetting.
TMZ Sports has confirmed that 20-year-old Michael Savarino was pulled over by the North Carolina State Highway Patrol around 1:10 AM in Orange County, NC ... after cops say he blew a stop sign.
During the traffic stop, police say Savarino -- whose mom is Coach K's oldest daughter -- showed signs of impairment ... so he was arrested.
"We are reviewing a legal matter involving two members of the men's basketball team, Any further actions as a result of this situation will ultimately be determined by the Vice President/Director of Athletics and University officials."
Both men were scheduled to play in #7 ranked Duke's game Tuesday night against Gardner-Webb at Cameron Indoor ... but their status is now unclear.