The national carrier had sought bids from banks to arrange a $500 million bridge loan on June 26. The loan would be repaid by a sale and leaseback of the planes that will be purchased.
Typically, a bridge loan is used to meet payment commitments until a long term financing is arranged. Bridge loans also have a higher interest rate.
The loan raised by Air India is for a six to 12 month period. Previously, Air India had got a similar bridge loan from Standard Chartered Bank last year to purchase seven Boeing 787 Dreamliners between September and June this year. The delivery of the next five Dreamliners will be taken between July and October this year.
The aircraft purchase is part of a 68 aircraft deal that the carrier had signed with Boeing in January 2006 which includes 27 Dreamliners, 41 Boeing 777s and Boeing 737-800s.