- Mr Mallya is wanted in India for over a billion dollars in unpaid loans
- He is also being investigated for money-laundering
- He has repeatedly ignored orders to return to face investigators & banks
"The UK Government has informed us that under the 1971 Immigration Act, the UK does not require an individual to hold a valid passport in order to remain in the UK if they have extant leave to remain as long as their passport was valid when leave to remain or enter the UK was conferred," the ministry of external affairs said in a statement.
Vijay Mallya, whose passport was cancelled last month, is wanted in India for over a billion dollars in unpaid loans. New Delhi had formally requested London that he be deported, which is faster than the process of extradition under a treaty between two governments.
"The UK acknowledges the seriousness of the allegations and is keen to assist Government of India. They have asked us to consider requesting mutual legal assistance or extradition," the foreign ministry said.
Mr Mallya, 60, is also being investigated for money-laundering. He flew first class to London on March 2 this year as banks attempted to recover the money he owes them, and has ignored a series of orders to return to India to face investigations and his creditors.
Last week, he pre-empted his expulsion from the Rajya Sabha or Upper House of Parliament by sending a resignation letter from London, saying he didn't want his name and reputation to be "further dragged in the mud".
Vijay Mallya started Kingfisher Airlines in 2003, vowing to provide Indians luxury travel at affordable prices. By 2012, the carrier had collapsed in financial ruin.
A group of 18 banks have rejected various options provided by him for repaying their loans, arguing that he must negotiate with them in person, and increase the amount he is willing to offer as a first installment towards clearing his debt.
The Enforcement Directorate is looking at whether Mr Mallya used part of a loan to purchase properties abroad, an allegation he has denied. A Mumbai court has issued an arrest warrant for him linked to this charge.
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