Cartoonist Bala was arrested from Chennai by a police team from Tirunelveli, they said.
Bala was arrested on the basis of a complaint filed by Tiruneveli District Collector Sandeep Nanduri, who was also caricatured in the cartoon along with the city police chief, police said.
The cartoon was uploaded on a website on October 26, days after a man and his wife set themselves and their two kids afire at the Tirunelveli Collectorate complex allegedly due to harassment by a money-lender.
Family head Muthu resorted to the extreme step as the money-lender was harassing him demanding more money despite him having returned Rs 2.34 lakh, including interest, for a loan of Rs 1.40 lakh, his brother had alleged.
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Police had later arrested three persons, including the financier and his wife, in connection with the incident.
After the incident, Palaniswami said the state had in 2003 enacted a legislation against charging of exorbitant interest rates by money-lenders.