Inspector in-Charge of Betanati police station Minati Biswal said the police carried out an operation in Baripada town yesterday and arrested the trio.
He said, Bhagabat Behera, who is a retired teacher and was abducted last month, was also rescued yesterday.
Bhagabat Behera of Tungadhua village was allegedly abducted by two youths while he was on his way to Baripada to withdraw money from a bank on September 10, the IIC said.
Abani Behera, the retired teacher's son, reported the matter to the police the following day.
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During interrogation, the accused Ajay Patra and Himanshu Naik, confessed to have their role in the kidnapping at the behest of the teacher's son, they said.
A case of kidnapping and extortion was registered in the Betanati police station.
Police said the accused had managed to withdraw Rs 40,000 from the bank account of Bhagabat through ATM transactions.
The arrested son also confessed to have committed the crime by engaging the two accomplices for a deal of Rs 50,000, the police officer said.