Mangat Ram Tatka, along with two accomplices, had allegedly strangled Shashi Bala after being unable to pay back a sum of Rs 5 lakh, and was arrested today.
The deceased had left home on April 11 telling family members that she was going to get back the loaned money, but did not return, following which police registered a case.
Her body was found with injury marks on her neck in a forest near Ishraheri village two days later, Superintendent of Police, Simardip Singh said.
Efforts are being made to arrest his two associates, he said.