Bank recap: Band aid for cancer surgery

How can this situation be improved by pouring more capital, and that too through the easy option of financial trickery?

A successful and thoughtful fund manager sent me an email me the other day, drawing a simple analogy about the government’s plan to recapitalise public sector banks (PSBs), an analogy that I have expanded upon. Assume that there is a bunch of listed companies controlled by a promoter family. The companies are value destroyers, racked by corruption. The promoter does not pay much attention to running these companies. The companies are short of capital because of piled-up losses but are sitting on a large amount of public deposits that they had raised. One day the promoter decides to use the