NEW DELHI - India's cash-strapped Kingfisher Airlines was suspended from a global payments system on Wednesday by the International Air Transport Association (IATA) over financial difficulties.

The loss-making carrier, controlled by flamboyant liquor baron Vijay Mallya, owes suppliers, lenders and staff millions of dollars and has recently scrapped scores of scheduled flights.

"IATA has suspended Kingfisher Airlines' participation in the IATA Clearing House (ICH)," Albert Tjoeng, spokesman for the industry body representing global airlines said in a statement.

"This is because the airline did not settle their ICH account within the stipulated deadline," Tjoeng said.

The decision means Kingfisher cannot "settle their transactions with other ICH members via the clearing house," another IATA spokesman, who could not be named, said.

The IATA is an international trade body of some 240 airlines that make up more than 80 per cent of total air traffic.

"Kingfisher's participation in the ICH will be reinstated after the airline fulfils the ICH requirements," the IATA statement said.

The announcement was a new blow to Kingfisher, which had no immediate comment, and came after Kingfisher bosses met pilots last week and urged them not to strike over a long delay in paying salaries.

The airline also denied weekend media reports that it had warned pilots of a probable shutdown.

Mallya, Kingfisher's chairman, has said that he is seeking fresh capital to avert collapse.