As a wilful defaulter, it would be tough for Vijay Mallya to raise money

Vijay Mallya, the 58-year-old tycoon, seems to be staring at the risk of being denied any loan from state-owned financial institutions for the next five years.

Two days ago, the Kolkata-based United Bank of India (UBI) had declared Mallya, known for his flamboyant lifestyle and spectacular business bets, as a wilful defaulter after his grounded Kingfisher Airlines declined to repay its debt. The UBI had also named three other directors of the airlines as defaulters.

According to the master circular of the Reserve Bank of India , a wilful defaulter could be barred from availing financial aid from state-owned or state-linked financial institutions for five years.

However, this does not stop him from doing business in India. "He has not been declared insolvent and only that would forbid him from entering into a contract with anyone. This is a severe impairment of his credibility. But there is nothing to stop him from doing business," says Ramesh K. Vaidyanathan, Managing Partner of Mumbai-based Advaya Legal.

Mallya is in India and will attend the annual shareholder meetings of UB Group and Mangalore Chemicals and Fertilizers Ltd (MCFL) on September 4, Thursday.

He is currently locked in a legal battle with the Pune-based Deepak Fertilizers for a controlling stake of MCFL and the wilful defaulter tag could impinge the move.

While the future looks bleak, Mallya did have legal recourse before the bank declared him wilful defaulter. "The Supreme Court observed that the special leave petition filed by Kingfisher Airlines Limited against UBI seeking legal representation before the grievance redressal committee of the bank had become infructuous as the committee had already made a decision," said a UB Group statement.

However, the court said that it was up to the KFA to pursue such legal remedies as available, the statement further said, a course that the company's considering.

Never shy of controversies, Mallya had once asked Narendra Modi, then Gujarat Chief Minister to lift prohibition in Gujarat, reportedly after a hooch tragedy. Modi turned it down after dubbing it as self-promotion.

Of late, the liquor baron's list of influential friends has thinned. Take Sahara Force India, the Silverstone -based Formula One car racing team, that he jointly owns with Subrata Roy .

Roy is already behind bars and is considering selling a set of marquee assets in India and abroad, including hotels to meet his obligations as set down by legal proceedings.

Both Roy and Mallya were both early to cash in on the sports boom in the country. While Roy sponsored the Indian cricket team for many years, Mallya was a late entrant who bought Royal Challengers, Bangalore.