MANILA: Philippine police said Monday they rescued a kidnapped Indian businessman being held for ransom but not before his captors had cut off one of his fingers and sent it to his wife.

Four kidnappers were killed when police rescued the man from a hideout in Santa Maria town, 37 kilometres (23 miles) north of the capital, on January 4, a police statement said.

Police said the recovery of the hostage was initially kept a secret because they were still hunting other members of the kidnap gang.

Gurtej Singh and his Indian wife were meeting clients north of Manila on December 22 when armed men seized them.

The wife was released on December 29 after 227,000 pesos ($5,590) in ransom was paid but the gang held on to Singh, demanding another three million pesos.

"To force the family to give in... they cut the small finger of Mr. Singh and sent it" to his wife, the police statement added.

The family instead contacted the police.

In a meeting with reporters, Singh, whose face was covered with a towel, thanked national police chief Director General Alan Purisima for his rescue but made no further comment.

The Indian embassy in Manila said it had no contact with the kidnap victims and relied on the local police for all information on the incident.

The gang behind Singh's kidnapping is also believed to have held an 11-year-old Taiwanese schoolgirl from January 9 to 11 south of Manila before being releasing her mysteriously, Purisima said.

Since the 1990s the Philippines has struggled with surges in kidnappings for ransom, carried out by Muslim extremist groups, criminal gangs and even rogue policemen.