India has raised more than $3.5bn from its nationals living overseas, under a special scheme intended to offset the impact of economic sanctions imposed because of its nuclear tests.

The India Resurgent Bond, launched by the country's state bank, allows Indians overseas to buy up bonds in dollars, pounds sterling or German marks without having to pay tax.

State bank officials say that more than 70,000 Indians have invested in the bonds.

A BBC correspondent in Bombay says the response has surprised many bankers.