In a reply to All India Anna Dravida Munnetra Kazagham (AIADMK) MP A.K. Selvaraj's question, Sinha said: "The short-term loan proposed by the airline was not taken as the Government of India released the required funds/amounts from National Small Savings Funds (NSSF) account for the payment towards both procurement and modification of two B777-300ER aircraft".
Earlier, the low-priced carrier IndiGo had sent formal expression of interest for Air India's airline arm.
"Qatar Airways firmly denies that it is involved in any talks regarding the acquisition of Air India", said an official statement issued by Qatar's national airline.
The Air India flight will fly over Oman, Saudi Arabia and Jordan to reach Israel.
A consortium of Jet Airways, Air France-KLM and Delta Airlines had reportedly expressed its interest in bidding for Air India, PTI had said.
Ever since the government cleared a proposal to sell the debt-run Air India, several companies have expressed an interest in buying some of its businesses. Air India-SATS is a joint venture which provides ground and cargo handling services. It aims to split the airline into four different entities and hopes to sell each entity.
On Tuesday, Union minister Jayant Sinha said that Air India had proposed to seek a short term loan of United States dollars 180 million from Bank of Baroda, which was selected by way of tender process for the modification of two Boeing 777-300 ER aircrafts for Special Extra Section Flights of the government.
In January, in a move created to expedite Air India's strategic divestment, the Cabinet approved changes to India's foreign direct investment (FDI) rules to allow foreign carriers to own 49 percent of the debt-ridden national carrier. InterGlobe Aviation, Tata Group and Turkey's Celebi Aviation Holdings have expressed an interest in acquiring the carrier since then.