The loans, about a dozen each from ADB and World Bank, are long-term loans taken between 1987 to 1995 and their repayment maturity is from 2007 to 2015.
The loans taken from ADB totalled $1.2 billion, while that of World Bank $1.6 billion.
Giving the rationale behind the decision taken on Monday, Finance Secretary S Narayan told reporters, "We are doing it because the interest rates are the lowest." Also the foreign exchange reserves, witnessing increased inflows are comfortable at $72 billion.
The loans are to be repaid through domestic market borrowing helping the government to suck in some of the liquidity, he said.
The entire Rs 13,600 crore (Rs 136 billion) needed for this purpose would be through additional borrowing as the government's borrowing programme, fixed at Rs 1,35,000 crore (Rs 1350 billion) for the entire fiscal has already been completed, additional secretary (budget), D Swarup said.
He, however, said the repayment would be totally fiscal deficit neutral as the borrowing will be matched by deletion of equal amount from capital account and hence it will not impact the fiscal deficit.
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