The banker-borrower nexus is not new to India, but the current episode, involving a high-profile businessmen and by far the biggest ever banking scam in the country's history, shows that the nexus is far deeper than we have ever imagined. The sole culprit of the Rs 12,600 crore scam has succeeded in giving the authorities a slip, and there is little doubt it will be not at all easy to bring the offender back to the country. According to a recent RTI response from the MEA, India's extradition success rate stands only at 33 percent, and we all know the instances of failure abound.

Our public sector banks have long been struggling with NPAs, so much so that the Centre --after a series of several hardly-successful policy measures by the RBI-- finally has to come out with a massive capitalisation scheme under which a whopping amount of Rs 2.11 lakh crore --representing nearly 1.2 percent of India's GDP --is to be allocated to these banks over a period of two years. Only last month, the Finance Minister said that the money was taxpayers' money and called for responsibility from banks. So now there's a question that's worth asking—is the money being spent for no good reason?

While the government's bank recapitalisation plan was widely welcomed as a step in the right direction, experts have always pointed out that better banking governance is a must alongside such aggressive capital infusion, and now the scams, unfolding one after another, show that we are miserably lagging behind in this respect. It is surprising that PNB, the second largest public sector bank in the country, took so much time to detect the fraud. Even a three three-tier audit failed to find it out. People are now even questioning the RBI's role as banking watchdog.

These developments are dampening hopes. Public's trust in the public sector banking is dwindling. Some industry bodies have now even put forward the demand for privatisation of the public sector banks, arguing that their recapitalisation over the last decade has had little impact on improving the health of the sector. Such reactions are very natural. Now, it is time for a change. The government, the RBI and the judiciary must urgently work together to restore the Nation's faith in the public banking system.

I invite your opinions.