The body of Sukhlal Soren, a student of Class V1 in a government school, was found hanging in a tree in the village under Baharagora police station.
The victim's father had lent Rs 1000 to his neighbor about two and half months ago and the two had an altercation over the issue as the neighbor Lakhan Soren had not yet returned the money, police said.
Police detained Lakhan for interrogation.