An Indian business tycoon wanted in his home country over fraud allegations has been bailed after appearing in court in London.

Entrepreneur Vijay Mallya, chairman of the UB Group and co-owner of Silverstone-based Sahara Force India F1 team, was released yesterday from Westminster Magistrates' Court after paying a £650,000 ($1.2m) security, court officials said.

Mallya was revealed as the recipient of the Sir Edmund Hillary Fellowship in 2011, when then New Zealand Prime Minister John Key was on a state visit to India.

Vijay Mallya, pictured in 2010, was arrested by British police yesterday. Photo / AP
Vijay Mallya, pictured in 2010, was arrested by British police yesterday. Photo / AP

Key said at the time: "Vijay Mallya is an outstanding businessman with a great affection for New Zealand. He is a worthy recipient of the Fellowship and will be a great asset in strengthening the longstanding and friendly ties between the two countries."

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Mallya was arrested yesterday by the British Metropolitan Police's extradition unit on behalf of authorities in India, where he is wanted on charges of money laundering and bank demands that he pay back nearly a billion pounds in loans extended to his now-defunct airline.

The 61-year-old, a former MP in India, entered the UK on a valid passport in March 2016.

Mallya was arrested after showing up in a police station yesterday, said a statement from the Metropolitan Police in London.

India's Enforcement Directorate, now investigating the liquor baron's debts totaling 94 billion rupees (almost $2 billion), asked a New Delhi court last year to demand Mallya's presence during proceedings.

At the time, it said Mallya was not cooperating with investigators, and three times ignored their summons to give evidence.

Mallya was famous for his flashy lifestyle and lavish parties attended by fashion models and Bollywood stars. He was once hailed as India's version of British tycoon Richard Branson for his investments in a brewing and liquor company, an airline, a Formula One team and an Indian Premier League cricket club.

Vijay Mallya seemed quite bullish following his court appearance, taking to social media to take a dig at the media hype. Photo / Twitter
Vijay Mallya seemed quite bullish following his court appearance, taking to social media to take a dig at the media hype. Photo / Twitter

But he ran into trouble when he failed to returns millions of dollars of loans and left India last year amid attempts by a group of banks to recover the money.

The failure of Kingfisher Airlines, which he launched in 2005, began his slippery slide into debt and triggered the collapse of several of his businesses. The Indian government in 2012 suspended the airline's license after it failed to pay pilots and engineers for months.

He had been living in the United Kingdom since March 2016 and had refused to return to India to face trial.

India cancelled his passport and began an extradition process asking the UK government to deport him to India.

India's Central Bureau of Investigation, the country's equivalent of the FBI, had charged the beleaguered tycoon with cheating and conspiracy for defaulting on a 9 billion rupee loan, given in 2009. The loan was intended to buy aircraft parts, but Mallya was accused of having transferred it abroad.

- with AP