Nirav Modi
(L-R) Naomi Watts, Nirav Modi and Deborra-Lee Furness attend the Nirav Modi U.S. Boutique grand opening at Nirav Modi Boutique on September 8, 2015 in New York City.Jamie McCarthy/Getty Images

The Punjab National Bank (PNB) has requested the Reserve Bank of India to let it spread the losses from the Rs 12,900 crore Nirav Modi scam over four quarters. PNB is effectively asking for an exception to RBI rules that stipulate that fraud accounts have to be written off at one go.

India's second largest lender at the centre of one of the biggest banking scams in the country is already reeling from net non-performing assets to the tune of Rs 34,000 crore. Analysts figure out that if the bank were to write off all the losses from the Nirav Modi-Mehul Choksi scam, as much as 25 percent of PNB's net worth of Rs 48,000 crore will be wiped out, leaving it unable to raise any funds in the market.

Analysts agree that the RBI may indeed accept the bank's request and that's fair enough. However, this probably heralds a new phase in the entire saga. The exciting part of the story -- unearthing of the scam, the public unravelling of a dishonest tycoon, humungous print reels and the zillions of eyeballs that told and retold the story from all angles -- are over. Now sets in the most dreary part of the news cycle. The punishment for the crime, the court battles over extradition and most importantly the recovery and recompense.

And that's a tedious process highly prone to becoming a victim of public amnesia. The daring bank heist executed in an unbelievably simplistic manner will now become the subject of complex arguments at various courts. Reporting of the story in this cycle will be painfully laden with legalese. And the whole process will inevitably drag on for years.

A painful specialty

The Harshad Mehta scam is a case in point. A quarter century after the securities fraud in which more than Rs 3,500 crore of bank funds were used to manipulate the stock market, the financial institutions haven't got their money back. The Income Tax department hasn't got its dues running into thousands of crores either. There's no closure yet and no one really knows when the comeuppance arrives.

The Big Bull died when the case was in the ninth year. His brother Ashwin Mehta, who is now managing the long-drawn case, decided to become a lawyer as decades went by. "That one of the protagonists of a case was able to secure a law degree also underscores a painful specialty of India's legal system — the achingly slow slog of cases in courts," says an interesting report in the ET in 2016.

The case of Vijay Mallya, who owes Indian banks Rs 9,000 crore after running aground his Kingfisher Airlines, is another example. Two years after he left the country to evade arrest, the extradition process hasn't made much headway. The creditor banks did confiscate some of his assets but the lion's share of the dues are still unpaid. If letting Mallya leave the country wasn't foolish enough, the system even failed to stop him from accessing $35 million from the $75 million he got from Diageo Plc for stepping down as chairman of United Spirits.

A year into the Mallya saga, the public sector banks were able to recover only a paltry Rs 155 crore from the liquor baron.

"As reported by PSBs, amount of Rs 155 crore has been recovered by conducting online mega auction by selling from seized properties from defaulting loan borrower Vijay Mallya," Minister of State for Finance Santosh Kumar Gangwar told Parliament.

'Poor state of Indian prisons'

After the Nirav Modi scam came to light, the Enforcement Directorate said it recovered diamonds and bullion worth over Rs 5,400 crore. However, his company Firestar Diamond has already challenged the ED's action in the Delhi high court. Modi and his maternal uncle Mehul Choksi have no intention to cooperate with any Indian investigation and have refused to appears before the CBI. It's an uphill task for India to recover the assets, what with the proceeds from the crime are in all probability stashed away safely in tax havens. The country will have to move fast in creating the legal framework that helps the process and broaden extradition treaty mechanisms.

Going by past experiences, the chances of extraditing Nirav Modi and Choksi are nil. UK courts refused to extradite bookie Sanjeev Chawla on Indian request, citing poor standards in Indian prisons. Vijaya Mallya mounted his defence against extradition on the same lines. Another high-profile case is that of diamond merchant Jatin Mehta, who cheated banks of Rs 6,800 crore and then settled down in tax haven island of Saint Kitts.

There are many more such cases where canny fraudsters duped the Indian public and banks of thousands of crore of rupees. An occasional expose is celebrated, but justice is never served in the real sense. In the absence of idiot-proofed preventive mechanisms and a willingness to enforce them, well-connected con artists will keep outsmarting the rusty system.