"There are five bids, the selection will be announced by the third or forth of March," Central Bank governor Nivard Cabraal said.
Bankers at Citi, HSBC, Standard Chartered, Deutsche Bank and ICICI Bank of India confirmed they had bid to syndicate the loan.
ICICI Bank lent 50 million dollars to the Sri Lanka government through the National Savings Bank this year.
The loan arranger, who earns a fee based on the size of the loan, usually gathers a syndicate of lenders.
The public debt office told potential bidders they want to repay the loan in five years.
"Most banks haven't stuck to the Central Banks RFP [request for proposals]. They are offering less than the 300 million dollars the government wants," a banker said.
"That’s what started this talk about pooling money to make up the 300 million."
Bankers says lenders are unwilling to go for long tenors due to current credit conditions and some have proposed loans a short as one year, and authorities are aware of discussions among banks.
Sri Lanka raised 500 million dollars through a bond issue in October last year which was arranged by investment banks JP Morgan, Barclays and HSBC, priced at 8.25 percent.
The government has been trying to extend the tenor of dollar borrowings of late.
"We are actively managing the debt to reduce our borrowing cost," Cabraal says.
Dollar interest rates have almost halved from their August 2007 level after the Federal Reserve cut interest rates to prevent the US economy from slipping in to a recession, but risk premiums have gone up amid rising risk perceptions.
"Markets are quite volatile," says another bidder for the dollar loan based in Colombo.
"So it's easier to get all the people to put their money in to one pot," he said,
A 2-year floating rate 250 million dollar Sri Lanka Development Bond (SLDB) issued to domestic investors and banks is maturing on June 28. In September, a further 70 million dollars falls due.
Sri Lanka's rupee government treasuries yields have also been edging down on lower borrowings and market rate expectations have also been mild with the syndicated loan looming ahead, though government cash requirements usually go up in March and April.
Sri Lanka has a BB - rating from Fitch and B + rating from Standard and Poor's with a negative outlook.