“I am in forced exile”, says Vijay Mallya

Vijay Mallya, the noisy Indian beer and spirits tycoon, is now a master.

His passport was revoked, an arrest warrant was issued for him and the Indian Foreign Office wrote to the British government asking for his deportation.

But the former golden boy of Indian capitalism declares himself ready to settle hundreds of millions of pounds owed to the banks after the bankruptcy of his company, Kingfisher Airlines.

In a four-hour interview with the Financial Times in Mayfair, central London, Mr Mallya said he wanted to close a painful chapter in his otherwise spectacular business career.

“We have always had a dialogue with the banks saying, ‘We want to settle.’ But we want to settle at a reasonable number that we can afford and that the banks can justify based on the settlements made before.”

But he adds: “By taking my passport or arresting me, they don’t get any money.”

As the Indian government plans to attempt to extradite him, Mr Mallya has said he has no plans to leave the UK, where he says he is in “forced exile”.

Chain smoking cigarillos and sipping English tea, the ponytailed multimillionaire confirms that he offered, in a submission to the Indian Supreme Court, to repay 440 million pounds ($ 644.12 million) on the principal delinquency of £ 512 million borrowed from state banks.

But the banks refused because, on his own terms, they fear they will suffer some discount on their loans in the face of the public frenzy against him in India.

“It is important to understand the environment in India today. Electronic media play a huge role not only in shaping public opinion but also in igniting government to a very large extent.”

Mr. Mallya has built an Indian beer and spirits empire which accounts for half of the country’s formal alcoholic beverage market. He was once an icon for Indian youth, aspiring to escape the constraints of their conservative and traditionally frugal society.

His participation in his Indian Premier League cricket matches United Spirits, his possession of a Formula 1 racing team, his parties and the models of his annual Kingfisher calendar have earned him the nickname “King of Good Times”.

But Mr. Mallya suffered a devastating financial blow in 2012 with the collapse of once popular but never profitable Kingfisher Airlines. He left behind a mountain of debt to a consortium of 17 banks, led by the government-owned State Bank of India.

It has now become a test for how Indian authorities treat heavily indebted business tycoons.

India’s central bank governor Raghuram Rajan – who is struggling to clean up public sector banks overloaded with bad debts – has complained about Indian entrepreneurs living in luxury while failing to meet their obligations to public lenders.

Kingfisher’s unpaid debts are estimated at around £ 900million, including principal and accrued interest.

But Mr Mallya says this sum is an “inflated amount”. He claims the principal actually borrowed was just over £ 500million, while interest in 2013, when legal skirmishes over repayment began, stood at £ 120million. “It is grossly unfair to charge compound interest and artificially inflate that figure,” he says.

Mr Mallya said his offer of a final settlement of £ 440million was “well above the World Bank average for bad debt settlement“.

He also claims that Indian banks have sold many past non-performing loans owed by other borrowers to asset rebuilding companies for only 30-40% of their book value.

India’s Law Enforcement Directorate – a special federal agency tasked with combating financial crimes – has targeted Mr Mallya on suspicion of embezzling part of a 900 crore loan (£ 90million ) of the IDBI bank abroad.

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Mr Mallya vigorously denies the accusation and calls on the government to send the best listeners in the world. “I am absolutely not guilty of any of these absurd accusations of Kingfisher embezzlement, buying property or anything like that.”

During the interview, Mr Mallya – a sitting member of the Indian parliament – categorically refuses to criticize the Indian government led by Narendra Modi. He rejects the idea that Mr. Modi, an austere figure, is behind the decision to issue his arrest warrant and revoke his passport.

“I am perfectly satisfied with a stable government [with a majority in the lower house]. I’ll be happy when there’s a majority in the upper house too [for the Modi government]. “

Instead, Mr Mallya accuses the political climate of failing to reach a deal with the banks, a climate which has seen him this week described as a “fugitive from justice” by the country’s attorney general.

“As professional bankers they would like to settle in and move on but, because of my image as presented, they are reluctant to give me a discount,” he says. “It will attract huge media criticism and investigation from vigilance agencies in India.”

He remains an Indian patriot, he insists, who is “proud to fly the Indian flag”, but as the outcry around him continues he is more than happy to stay safe in the UK.

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