The latter was also taken into custody for allegedly misbehaving with some women who visited him.
Subba Reddy, the accused, got a 30-year-old man dressed up as 'a baba' in saffron robes and installed him near a religious place in Yerraguntla.
He then told the people that the baba can cure people of serious ailments and exorcise evil spirits, said police sub-inspector Sanjiv Reddy.
"Subba Reddy collected money from the poor people who visited this baba. However, around four-five days ago this baba started hugging and kissing women," the police officer said citing complaint filed by a Bajrang Dal worker.
A case of cheating, molestation and 'inducing person to believe that he will be rendered an object of the divine displeasure' (section 508) has been filed under the Indian Penal Code.
"This so-called baba seems to be a semi-lunatic person," Kadapa DSP Ashok Kumar told PTI over phone.