The racket was allegedly led by 24-year-old Varun Sardhana, a former employee of a multinational bank, Additional Commissioner of Police (Crime) Neeraj Thakur, said. Sardana, his two school friends-- Himanshu Sharma (21) and Sunny Pal (22)-- and five girls aged between 19 and 27 years were arrested from their office in Parmanand Colony in Mukherjee Nagar on October 28, he said.

"The gang advertised extensively in local dailies in the NCR region offering easy education loans. The victims were convinced by girls who would talk to them on phone to deposit some fee in the given bank accounts," Thakur said.

More than 500 students have been duped by the gang during the past one year, he said adding a number of bank accounts used by the gang show transactions worth more than Rs one crore during this time.

According to Thakur, Sardana allegedly hit upon the idea of floating a fake education loan firm when he was working in a multinational bank in Delhi. "He left his well paying job and recruited his school friends, Himanshu and Pal to run the racket in Delhi. He hired a few girls and trained them. He taught them how to sell the story of easy education loan to gullible callers," he said.

"When a client called, the girl would ask him to first deposit a certain amount between Rs 2,500 to Rs 3,000 as processing fee in a certain bank account. After they gave the money, they were asked to send all relevant certificates through email," Thakur said.

The victims were fleeced by the gang which would tell them that more money was needed to rectify deficiencies in the certificates. "Then the victim would be asked to deposit the first instalment of the loan in a bank account before the promised loan finally comes," he said.

The gang was found operating through 26 mobile phones and 16 bank accounts taken on fake IDs. Fifty-seven unused SIM cards have also been recovered along with 18 ATM cards. Thirteen registers with details of transactions, one laptop, one computer and other documents have also been seized.