New Delhi: The Central Information Commission’s (CIC) ruling to bring SBI Cards under the ambit of Right to Information Act could adversely affect business prospects of subsidiaries of state-owned banks, experts feel.
After the CIC ruling, subsidiaries of state-owned entities in which the parent has more than 51% stake, would have to comply to RTI regulations and provide information to the public, said Diljeet Titus, a senior partner of law firm Titus and Co.
Although the CIC’s ruling is an extension of established law, it will have implications on the banking sector, he said, adding that in practice it may prompt corporates and individuals to shift accounts to private banks to preserve business confidentiality.
Terming it as an “important and sensitive judgement”, Rodney D Ryder, partner of corporate law consultants Fox Mandal Little, said: “While the judgement is welcome, there is no effective counter-check to prevent sharing of financial and private data.”
The CIC needs to clarify on privacy issues that would emerge in cases of disclosure of information relating to banking and financial services enterprises, he said.
Ryder also suggested enactment of a “counter balancing legislation” to check misuses that are likely to follow the CIC decision to expand the ambit of the RTI Act.
With the order expected to have a far reaching impact on the country’s banking sector, an emerging conflict between the RTI Act and banking secrecy laws is on the anvil, which may lead to more litigation, Titus added.
“It would be interesting to note how the conflict between the RTI Act and banking secrecy laws are decided by the courts,“ Titus said.
The apex information panel in its order on 1 September had noted SBI Cards, a joint venture between SBI and General Electric (GE), was a subsidiary of the state-owned bank and an instrument through which one of the bank’s businesses was being carried out.
While SBI holds 60% in its subsidiary set up in 1998, GE owns the remaining 40%.
Disposing of two separate applications by SBI Cards customers — Arun Kumar Verma and Dileep Ayachit, Information Commissioner Padma Balasubramanian had directed the parent firm to take a decision on setting up a proper information redressal mechanism for its subsidiary within 15 days.
Dismissing the contention of SBI and Reserve Bank of India that SBI Cards was beyond the RTI purview, CIC in its order noted, “SBI, being a public authority, should ensure that some agency is available to answer the citizens when they seek information about their own cards.”
“It (SBI) cannot wash off its responsibility after having allowed SBI Cards to use its brand name and logo,” the order said.