NEW DELHI - A flamboyant Indian business tycoon, wanted in India on charges of fraud and defaulting on loans worth over one billion dollars, was arrested Tuesday in Britain on behalf of Indian authorities.

Vijay Mallya was released on bail by a London court a few hours later.

His arrest came a year after he quietly left the country and went to live in London after state-owned banks sued him to recover loans amounting to $1.4 billion.

In New Delhi, the government hailed the arrest of the one-time liquor and aviation baron, saying they will pursue his extradition back to India.

Junior Finance Minister Santosh Gangwar told reporters that Mallya will be brought back to India and the due process of the law will be followed.

Mallya's case is being seen as a litmus test of Prime Minister Narendra Modi's pledge to crack down on corruption.

The flashy businessman has become a poster boy for defaults on massive loans piled up by corporate tycoons and for a cozy nexus that many say has existed in India between businessmen and politicians.

After Mallya went to live in London, the government faced huge criticism from the public and from opposition lawmakers for not preventing him from leaving the country and bringing him to trial. He had refused to return to India to appear in court.

Mallya, who owned a liquor business, ran into trouble when a premium airline he launched in 2005 went bankrupt. Despite the massive loans he had accumulated, the man who called himself "the king of good times" continued to lead a lavish lifestyle and was as much in the news for his flashy parties as his debts, prompting huge public anger.

His arrest follows considerable diplomatic lobbying by New Delhi. Britain had turned down the initial request for his deportation last year, saying he entered the country on a valid passport.

In its latest extradition request, India had said that if the request is honored, it would show "British sensitivity toward our concerns."

Soon after his arrest, Mallya tweeted "Usual Indian media hype. Extradition hearing in Court started today as expected."

The businessman has repeatedly denied charges of wrongdoing, and calls the collapse of his airline a genuine commercial failure. He has also accused government agencies of pursuing a "heavily biased investigation" and holding him guilty without trial.

However, extraditing Mallya from London to India may not be easy. Indian authorities will have to prove that they have enough evidence to prosecute him, while Mallya is likely to maintain that he will not get a fair trial in India.