KUALA LUMPUR (The Star/Asia News Network) - Malaysian Prime Minister Najib Tun Razak says 1 Malaysia Development Bhd (1MDB) is not going bankrupt as the state-owned investment arm has already settled a debt of RM2 billion (S$747 million).

"1MDB has paid off a RM2 billion debt with Maybank and RHB on Feb 13, 2015 in accordance with the terms of the loan agreement. Therefore, the issues of 1MDB going bankrupt does not arise," Najib, in his capacity as Finance Minister, said in a written parliamentary reply to opposition MP Jeff Ooi published on Wednesday.

Ooi had asked if 1MDB had declared bankruptcy for allegedly failing to pay off the RM2 billion debt in accordance with the contractual scheduled repayment with Maybank and RHB bank.

Ooi also questioned why Bank Negara had not responded to the matter.

Najib, who chairs 1MDB's advisory board, has been facing criticism over the company's debt of nearly 42 billion ringgit (S$15.66 billion) and alleged financial mismanagement.

Najib has ordered an official enquiry into the accounts of the fund.

Malaysia's finance ministry has asked its in-house restructuring outfit, Prokhas, to help 1MDB resolve its cash-flow problems, sources said.

1MDB, which is 100 per cent owned by the finance ministry, needs about RM5 billion (S$1.86 billion) this year to meet its debt obligations.