Rejecting his bail plea, the Bidannagar court sent Ghosh to police custody.
The police had also conducted a raid at Ghosh's house and seized his computer's hard disk, media reports said.
The police earlier claimed that the evidence indicated that Ghosh was involved in the conspiracy along with Saradha Group chairman Sudipta Sen.
The journalist turned politician was arrested by the Bidhannagar Commissionerate Police under various sections of Indian Penal Code (IPC), including Sections 420, 406 and 120 B, the police said.
"Of what we got so far, Kunal Ghosh was also a part of the conspiracy along with Sudipto Sen [Saradha chairman who was arrested in April] and others," said Arnab Ghosh, the deputy commissioner of detective department of Bidhannagar Police Commissionerate, probing the scam.
Ghosh himself earlier lodged a complaint against Arnab Ghosh, the cop probing the scam, alleging intimidation.
Embroiled in the Saradha scam and knowing that he might be arrested, Ghosh earlier said the top leadership of the ruling TMC in West Bengal was aware of the developments in the chit fund company that went bust leaving countless small investors in the lurch and rendered many mediapersons jobless with the closure of its publications.
With Ghosh falling out of the party which made him a Rajya Sabha MP, he trained his guns on the Trinamool leadership hinting that Chief Minister Mamata Banerjee too was aware of the rot in Saradha.
"I had always informed the top leadership about what is happening. The government cannot get away from its own responsibility," said Ghosh who demanded a Central Bureau of Investigation (CBI) probe into the ponzi meltdown.
"The situation that occurred today could have been avoided," said Ghosh, who went on to be the CEO and editor of all Saradha group media arms and used to draw a hefty salary.
He said he is being made a scapegoat and the cops visited his house late in the night of Friday even though he is making himself available for quizzing always to police.
Bidhannagar police commissioner Rajeev Kumar on Friday met the home secretary at new state secretariat Nabanna, according to media reports.
"I have gone to the Bidhannagar Police Commissionerate ten times. I answered all their questions. I am to go for eleventh time tomorrow [Saturday]. Why then come to my place at odd hour?" he asked.
Ghosh said he will write to the Prime Minister demanding a CBI probe into the scandal.
Saradha Group Chairman and Managing Director Sudipta Sen along with his associates was arrested at Sonmarg in Jammu and Kashmir in April in connection to the chit fund scam.
--IBNS (Posted on 24-11-2013)