Beleagured Malaysian state-owned fund 1MDB has settled a RM2 billion loan with Malaysian banks, averting default in the nick of time.

Its president and group director Arul Kanda confirmed the payment earlier this evening.

He said in a statement: "I can now confirm that 1MDB has settled, in full, a RM2 billion loan owed by an operating subsidiary of ours to Malaysian banks. The loan was settled in advance of the due date, per the terms of the loan facility agreement. With the settlement of this loan, I reaffirm 1MDB's commitment to continue meeting all our debt obligations as they become due."

Earlier reports had said that Malaysian banks were threatening to pull the rug from under 1MDB's feet if it did not make this payment on time. The RM2 billion forms part of a larger RM5.5 billion bridging loan.