THE lower house of Indian Parliament reconvenes today for the second half of the budget session. The first half ended without transacting much business because of protests by members from Andhra Pradesh over the issue of Special Category Status to their southern state. But the second half is likely to be dominated by $1.77 billion bank fraud that has shaken confidence in India’s state-dominated banking system. The opposition will surely raise the issue in Parliament.

Did not the BJP stall an entire winter session of Parliament demanding a probe into the alleged corruption in the allocation of 2G spectrum during the time of the Congress-led United Progressive Alliance (UPA) government? This was BJP’s top plank against the Congress before and after the 2014 general elections that it won handsomely.

Unlike the UPA, no minister in the Modi Cabinet has anything to do with the scam involving the Punjab National Bank and diamond merchant Nirav Modi (no relation to Prime Minister Narendra Modi) and associates. Still, the government is working hard not to let the impression grow that Nirav Modi could not have fled the country and escaped law without some help from someone higher-up. His escape has disturbing parallel with that of Vijay Mallya, the liquor baron who had slipped out of the country in March 2016, as taxmen closed in on him. The BJP government did manage to escape the blame when Lalit Modi, a businessman and cricket administrator accused of violation of the Foreign Exchange Management Act (FEMA) fled the country too, because of Modi’s personally clean image and popularity.

But many things now should worry the prime minister and his government though the scam first began in 2011 when the UPA government was in power. For one thing, the scandal is the biggest in India’s banking sector. Secondly, Modi has had excellent relations with the business community since his days as the Gujarat chief minister. It can’t be held against a chief minister or politician that he is business-friendly. But, according to the Shiv Sena, a member of the NDA, Nirav was a sympathizer of the BJP and played a leading role in collecting funds for it during the elections. Another blow has been the group photo of businessmen at the World Economic Forum in Davos, in which Nirav is seen standing behind Narendra Modi. Are we to believe that a prime minister like Modi would allow one of his minions to vet the list of business leaders who would be present at Davos, attend a Confederation of Indian Industry (CII) meeting addressed by him, and be part of a group photograph? Another unanswered question is how is it that a complaint filed with the Prime Minister’s Office of a bank fraud of this magnitude did not come to Modi’s notice.

Unfortunately, this scandal has come at a time when Modi is under attack for his economic policies and his failure to deliver the “good days” he promised in the first flush of victory in 2014. The arrest of businessman Karti Chidambaram, the son of a former Congress Finance Minister P. Chidambaram, in a bribery case with the possibility of the father himself being implicated, may divert some attention from the bank scandal but is not going to be much of a help to Modi and his party. True, the Congress, while in power, was not known for probity. But the arrest of Karti at this juncture is reflective of sinister political motives.

Public faith in the banking system has been shaken for the second time after Modi came to power. People are still suffering the effects of the first — demonetization of currency in November 2016. Let the government do everything in its power to distance itself from the fraud, and to insulate the prime minister. But it should not forget that this has reignited concerns about operations and oversight at India’s banks.