Police arrested Bansi Lal, close confidant of former Prime Minister Indira Gandhi and defense minister in her governement, today.

Lal is the only Cabinet level official of the former, government to be charged so far in a spreading investigation of corruption among members of the former prime minister's inner circle. He is believed to be once of the four officials most responsible for the harsher aspects of Indira's 20-month emergency rule.

Lal's arrest for allegedly misappropriating $60,000 in Congress Party funds came three days after similar though unrelated charges were laid against three other close Ghandi aides. The three were accused of funneling $7 million in Congress Party funds to a network of dummy corporations.

A source close to Prime Minister Morarji Desai, whose People's Party coalition knocked Ghandi out of office in the March elections, said the probes into the financial dealings of her family and associates are expected to produce more arrests.

"The investigators at the moment have more information than they know what to do with," the source said.

Lal is the first of the "caucus," the four men closest to the former prime minister, to be arrested. The other three include Ghandi's son Sanjay.

Lal was arrested this afternoon in his home town, Bhiwani, 60 miles west of New Delhi, police said. An arrest warrant was also issued for his son, Surinder Sindh, a recently elected state legislator.

Police said the arrests came after the Congress Party claimed that they had been forced to sign false receipts for expenditures on Lal's reelection campaign. Lal, like Indira and Sanjay Gandhi, lost their seats in the election.

A close associate of Sanjay, Lal became defense minister in December 1975, six months after Indira Ghandi declared a state of national emergency in which civil liberties were suspended, press censorship was imposed and thousands of her political foes were jailed.

In April, following its decisive defeat, the Congress Party suspended Lal's membership for six years for "undemocratic,autocratic and undignified activities."