NEW DELHI. June 5: India, in desperate need of foreign exchange, has sold 20 tons of gold In Zurich for 240 million dollars bankers and diplomats said, reports Reuter.

The sales took place in the last week of May and are described as a "gold swap* by banking sources in Bombay Involved with the transactions.

India Is putting up the gold as loan collateral and has the option of buying back the bullion later at prevailing world market prices or of paying off the loan, said one banker who did not want to be named.

Trade sources in Bombay said India is preparing to sell at least another 10 tons of gold on the international market

Officials in the caretaker government of Prime Minister Chandra Shekhar declined to

comment on the reports.

India, whose credit rating has plummeted because of dwindling foreign exchange reserves, spiralling foreign debt, and political uncertainties specially after Rajiv Gandhi's assassination, has found It all but Impossible to borrow aboard lately

Foreign exchange reserves as of May 17 were 26.2 billion Rupees (1.3 billion dollars ) against 32.4 billion a year ago.

India's foreign debt as of March 1990 was 70 billion dollar. But about four billion dollar that total is fast revolving, short-term debt on which India is scrambling to avoid default.

The country has a tremendous appetite for gold, particularly the Jewellary industry, and a huge stockpile of confiscated bullion.