In the face of burgeoning forex reserves at over $93 billion, the government has quietly prepaid $1.4 billion worth of costly foreign loans to the World Bank and Asian Development Bank.
"Nearly $1.4 billion loans of World Bank and ADB has been prepaid from the surplus cash with the Reserve Bank of India as part of the cash management exercise," official sources told PTI in New Delhi on Thursday.
The government, which prepaid $2.97 billion of multilateral loans last fiscal, has decided to prepay $2.8 billion dollars this fiscal.
Of the $2.8 billion, about $1.4 billion would be bilateral loans whose prepayment would start from December, the sources said.
This is for the first time the government has decided to prepay bilateral loans, which usually come with certain strings attached to it.
Usually, the loans are prepaid in forex and an equivalent amount of government securities is issued to the RBI. But the recent prepayment was done from surplus cash, sources said.
The bilateral loans which are to be prepaid would, however, be done through issue of securities of equivalent amount, they added.