* Supreme Court asks banks to reply within a week
* State Bank of India says examining offer
* To pay 20bn rupees more if Kingfisher wins separate case
Embattled Indian tycoon Vijay Mallya has proposed to repay Rs 40bn ($603mn), less than half of what his defunct Kingfisher Airlines owes to creditor banks who have approached the nation's highest court to recover their dues.
Mallya, who left India on March 2 and whose exact whereabouts since then are not known, made the offer on Wednesday to the group of lenders led by State Bank of India to pay the sum by end-September.
A lawyer for Mallya also told India's Supreme Court that Kingfisher could pay another Rs 20bn to banks if it wins a lawsuit seeking damages from a plane engine maker. The lawyer did not give a time frame for that payment, while a spokesman for Mallya's UB Group did not reply to a request for comment on the repayment offer.
The court has sought the banks' response within a week to Mallya's proposal. It will hear the case next on April 7.
Separately, State Bank of India, the nation's top lender, said it had received an offer for "settlement of dues" on Wednesday, and was examining the offer.
Kingfisher, once India's second-biggest airline, ceased operations more than three years ago after a stretch of losses, leaving creditors, suppliers and employees with unpaid dues.
As of last November, it owed the group of banks about $1.4bn including interest and fees.
The creditor banks stepped up pressure on Mallya - who gave a personal guarantee for the Kingfisher loan - after he agreed to a $75mn settlement with Britain's Diageo Plc last month to give up his chairmanship and board position at top Indian spirits maker United Spirits Ltd. After stepping down, Mallya said he would spend more time in England where his children live.
Once known as the "King of Good Times" for his extravagant lifestyle, Mallya has denied that he had fled India and said he would comply with local laws. Media reports have traced him to the Hertfordshire village of Tewin, north of London, where he owns a house.
Mallya's case has taken centre stage at a time when the central bank and the government have begun a crackdown on bank loan defaulters to clean-up the nation's ailing state-run banks. Finance Minister Arun Jaitley has said the government had asked banks to go "all out" in their efforts to recover money from Kingfisher.
