Has 3G network stopped working on a 2G SIM

Hi gurus,

I have a Samsung GT-6625 3G( WCDMA ) cell. I have recently taken a bsnl prepaid sim in orissa and recharged it with 274.
My problem is..

1. I changed the network to 3G but still I get speed of max 20 Kb/s ( 160 Kilob/s ).3G icon disappears on the screeb to sometimes 'H' or 'E'.
2. I tried recharging it with Re 1 to convert it to 3G and then used APN as bsnlne ( I am nt sure wether it got converted to 3G or not )t ....I saw a speed of 250 Kb/s but after few minutes my balanced got reduced and it stopped working when the balance was less than 50.

Can anyone help me in attaining the speed on this unlimited GPRS via 3G network. I read somewhere that BSNL has barred registration of 2G sim on 3G network.Is it true ?

PS : i tried all this on suggestions of one of my colleague who still uses the same procedure. His sim is 3-4 mnths old and in the same circle.