India's top financial bureaucrat denied on Monday that the government was seeking dollar loans to repay some of its offshore debt.

"Nothing at all, we do not need any money," Finance Secretary S Narayan said when asked if India was planning a dollar denominated loan.

India has a record $72.4 billion of forex reserves, among the largest in the world, which has been rising on strong remittances from expatriate Indians, trade and foreign investments.

The government has been using the reserves to repay foreign debt, which totaled $98.1 billion at the end of the last fiscal year in March, 2002.

The external debt was $99.7 billion in the year before.

Earlier, debt markets newsletter BasisPoint said the Indian government was talking to banks for a dollar-denominated loan to repay offshore debt.

BasisPoint, a Reuters company, said India was considering two options: an 'external commercial borrowing' that would be syndicated and a long-dated offshore bond.

It added that the proposed deal for about $2.5 billion has generated considerable interest among major arranging banks in Asia and senior syndicators from several banks were in India last week to discuss the transaction.

It quoted banking sources as saying that the Indian government is eyeing a 10-year loan with an amortising repayment schedule.

BasisPoint also quoted sources saying that a long-dated bond would be a tougher sell than loans because of New Delhi's sub-investment grade rating.