RBI cannot deny information sought under RTI, rules SC
Apex court says RBI can't deny information sought under RTI law merely by citing economic interest and fiduciary relationship with banks
New Delhi: The Supreme Court has said the Reserve Bank of India (RBI) cannot deny information sought under the right to information (RTI) law merely by citing economic interest and the central bank’s fiduciary relationship with banks, bolstering the cause for transparency.
While the RTI law states that economic interest was a valid ground for restricting access to information, Wednesday’s court ruling says that information is an empowering tool which could foster national interest.
A bench comprising justices M.Y. Eqbal and C. Nagappan said many public information officers routinely denied information sought under RTI “under the guise of one of the exceptions” provided under the 2005 Act. The court condemned this, saying it was in national interest, as well as economic interest to have a more informed people.
“Because an informed citizen has the capacity to reasoned action and also to evaluate the actions of the legislature and executives, which is very important in a participative democracy, this will serve the nation’s interest better...,” the court said.
A spokesperson for RBI did not immediately respond to the development.
The verdict also called for a more open and transparent government. “The ideal of government by the people makes it necessary that people have access to information on matters of public concern,” the court observed. “The free flow of information about affairs of government paves the way for debate in public policy and fosters accountability in government.”
The court added a caveat: the central bank could not be “put in a fix by making it accountable to every action taken by it”.
The court was considering a bunch of petitions filed by RBI and other banks challenging orders of the Central Information Commission directing that information sought by certain citizens be provided to them. These cases related to reports which RBI keeps after inspecting banks and financial institutions. These reports contain a wide range of information on banks, privately owned or otherwise. The regulator receives this information under the Banking Regulation Act. According to RBI, these were held in fiduciary duty towards banks.
The apex court junked this submission. According to the court, RBI didn’t receive the reports of the inspections, statements of the bank, information related to the business on the condition of confidence or trust.
“RBI is supposed to uphold public interest and not the interest of banks. RBI is clearly not in any fiduciary relationship with any bank,” the court said. “RBI has no legal duty to maximize the benefit of any public sector or private sector bank, and thus there is no relationship of ‘trust’ between them.”
The court added that it was RBI’s duty under the law to uphold interests of the public, depositors, the country’s depositors, the national economy, and the banking sector. “Thus, RBI ought to act with transparency and not hide information that might embarrass individual banks,” the court said.
RTI activist Venkatesh Nayak said that the judgement expanded the scope of the regime of transparency under the RTI law. “The latest SC judgement clarifies the understanding regarding fiduciary relationship much more than what the SC had explained in previous cases. This judgement will go a long way in deepening transparency in the banking sector. Last year, I had applied for details of NPAs of 20 public sector banks all of which had been rejected by respective banks. This judgement now clears way for making public information about bank loan defaulters and also about action taken by RBI to enquire into irregularities committed by public and private sector banks including co-operative banks,” he said.
Cases where information from RBI was denied varied. P.P. Kapoor had sought details on loans taken by industrialists which remained unreturned and top defaulters who failed to repay public sector banks. Subhash Chandra Agrawal had asked about show cause notices given and fines imposed by RBI on different banks.
Kapoor, a transparency activist who was one of the parties in the case, was concerned by how small loan defaulters were treated at his village in Haryana. “Supreme Court’s judgment is a great step forward and it should have happened much earlier. This will lead to more transparency as common people would be able to find out the name of defaulters, specially those who hold shares,” Kapoor said.
RBI had resisted disclosure of reports of the annual financial inspection, scrutiny of all banks or financial institutions, saying that it could create “misunderstanding/misinterpretation in the minds of the public”. RBI also said that it could affect financial stability through a loss of confidence in the bank. This would affect economic interest of the country, it had argued.
Prashant Bhushan, who represented Kapoor and Agrawal in court, said that this judgement will act as a deterrent to other regulators, too. “This judgement debunks this fig leaf that RBI, various other banks and institutions show to deny information about scams, corporate defaults and various wrong activities which seek to remain hidden,” he said. “This judgement will hopefully act as a strong deterrent to this.”
Ira Dugal in Mumbai, and Anuja and Mayank Aggarwal in New Delhi contributed to this story.
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First Published:17 Dec 2015, 12:50 AM IST
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