Mumbai: The governement wants ICICI Bank to repay or prepay foreign currency borrowings guaranteed by it or arrange for alternative guarantees.

ICICI Bank had government-guaranteed loans and bonds worth Rs3,396.67 crore outstanding as on 31 March, 2007, comprising around 4.8 per cent of the total borrowings (including subordinated debt) of ICICI Bank at the end of March 2007.

These loans and bonds were raised or issued by the erstwhile Industrial Credit and Investment Corporation of India (ICICI), a development finance institution, which was not allowed to raise deposits as its primary source of funding.

Prior to ICICI''s reverse merger with its subsidiary ICICI Bank, the sources of funds for development finance institutions were retail bonds and rupee borrowings from a wide range of institutional investors.

ICICI had also raised funds through foreign currency borrowings from commercial banks and other multilateral institutions like the Asian Development Bank and the World Bank, which were guaranteed by the Government of India.

ICICI Bank''s borrowings increased to Rs61,660 crore ($ 14.3 billion) at the end of March 2007 from Rs45,000 crore ($10.4 billion) at the end of March 2006, primarily due to the increase in foreign currency borrowings, said the SEC filing.

The bank''s primary source of funding is deposits and, to a smaller extent, borrowings.