Nirav Modi, India's fugitive jeweller to the stars, has been arrested in London and faces an extradition hearing on Wednesday, police said.

Modi is accused of involvement in a massive bank fraud that rocked India's corporate community.

Modi, 48, owned luxury jewellery stores in several major cities across the world and boasted celebrity customers including actresses Naomi Watts, Kate Winslet and Priyanka Chopra-Jonas before his downfall last year.

A spokesman for London's Metropolitan Police told AFP that Modi was arrested on behalf of the Indian authorities in the British capital on Tuesday.

He was due to appear at a London court on Wednesday, the spokesman said.

Modi fled India in February 2018 after being accusd of having a central role in a $1.8-billion fraud involving Punjab National Bank (PNB), the country's second-largest public lender.

Earlier this month, Indian authorities dynamited the fugitive billionaire's multi-million-dollar seafront mansion.

The 33,000 square-foot (3,000 square metre) property near Mumbai, believed to be worth $14 million, had been seized.

Forbes estimated Modi's wealth at $1.73 billion before the alleged fraud, placing him 85th on India's rich list.