"The government prepaid bilateral loans of 576.84 million dollars and currency pool loans of 1,437.05 million dollars to the World Bank ahead of their due dates in the three months to December," the Reserve Bank of India said in a statement.

The government has also decided to prepay a loan worth 93.6 million dollars to Italy.

The Indian government bought the foreign exchange to repay these loans by issuing bonds worth 95 billion rupees to the central bank -- 4.69 per cent 2008 bonds for 65 billion rupees and 5.64 per cent 2019 bonds for 30 billion rupees, the statement added.

Any residual rupee requirements will be met out of the government's cash holding, said the central bank.

India, which 12 years ago launched economic reforms in a desperate move to shore up foreign exchange reserves that had slumped to an all-time low, is now confronted with reserves that have ballooned to over 100 billion dollars.

Soaring reserves are a sign of confidence in the economy, forecast to grow by 7.0 per cent in the year to March, making it among world's fastest-growing.