India's financial crimes agency on Friday summoned indebted entrepreneur Vijay Mallya in connection with a money-laundering probe, after he left the country owing more than $1 billion in unpaid loans to banks.

The Enforcement Directorate (ED) issued a summons for the liquor baron, who is thought to be in Britain, to appear before investigators in Mumbai on March 18, the Press Trust of India reported.

The founder of the now-defunct Kingfisher Airlines is sought in connection with an alleged case of loan fraud involving state-run IDBI Bank in Mumbai, PTI said.

"The summons have been issued to Mallya under provisions of the Prevention of Money Laundering Act in connection with the IDBI case," the news agency quoted officials as saying.

With its summons, the agency has also thrown down the gauntlet for Mallya, who denies that he absconded after his surprise departure from India more than a week ago.

A group of banks led by State Bank of India is trying to recover some 90 billion rupees ($1.34 billion) in unpaid loans from the tycoon.

The flamboyant businessman, who is also a member of the Indian parliament, earlier tweeted that he would comply with the law and criticised the media for what he called a "witch hunt".

"I am an international businessman. I travel to and from India frequently. I did not flee from India and neither am I an absconder. Rubbish," Mallya posted on Twitter.

"Once a media witch hunt starts it escalates into a raging fire where truth and facts are burnt to ashes."

His departure is an embarrassment for the government, which had to admit in court this week that he had left the country even as it sought permission to impound his passport.

Opposition politicians have demanded to know why the 60-year-old was not arrested before he left the country on March 2.

- 'King of Good Times' -

The Central Bureau of Investigation, India's leading investigative agency, in October registered a case against Kingfisher Airlines over a suspect loan the carrier received from IDBI Bank.

It alleged the airline's directors "colluded" with officials from IDBI bank who sanctioned a nine-billion rupee loan in violation of banking norms, resulting in a "huge loss" to the bank.

The ED on Monday tweeted that it had initiated a money laundering investigation on the basis of the CBI's report.

Mallya, who has not been charged with any crime, stepped down last month as chairman of United Spirits, the Indian arm of Britain's Diageo, following allegations of financial lapses.

An Indian tribunal blocked his $75 million severance payout at the request of the banks that are owed money from Kingfisher, but Diageo said this week it had already paid $40 million of the payout.

The attorney general, representing the banks in court, on Wednesday called for Mallya to appear in the Supreme Court and disclose his assets.

Mallya was known as the "King of Good Times" before the 2012 collapse of his Kingfisher Airlines, which left thousands of workers unemployed and millions of dollars in unpaid bills.

As his liquor business flourished during the early 2000s he diversified into other areas and in 2005 launched Kingfisher Airlines, named after his company's best-known beer.

But he was unable to stop Kingfisher from haemorrhaging cash, and following a pilots' strike over unpaid wages the airline was grounded in 2012 having never made a profit.

The row comes as India's state-run banks face growing pressure to step up recovery of a mountain of bad loans.