Continuing with its tradition to disregard the Right to Information (RTI) Act, the Reserve Bank of India (RBI) once again failed to uphold the provisions of the Act by not sharing information on bank inspection reports. In fact, when in 2015 the Supreme Court itself had directed RBI to share the reports under RTI, the central bank has gone one step ahead and denied information citing one paragraph from the apex court's ruling. Even in April this year, the apex court rejected a plea filed by banks to recall the 2015 judgement asking RBI to disclose the list of loan defaulters and bank inspection reports under the RTI Act.
Mumbai-based RTI activist Girish Mittal has asked RBI to provide copies of inspection reports or risk an assessment report made by the central bank after completing the inspection of commercial banks and non-banking finance companies (NBFCs) for the past three years. He sought copies of reports of HDFC Bank Ltd, RBL Bank, Yes Bank, Axis Bank, ICICI Bank, Bajaj Finance Ltd, State Bank of India (SBI), Bank of Baroda (BoB), Induslnd Bank, Kotak Mahindra Bank (KMB), HDFC Ltd, Infrastructure Leasing & Financial Services (IL&FS), IDFC Bank and Sahara India Financial Services or any entity of Sahara group registered with RBI.
In case of banks and Bajaj Finance, Abhay Kumar, central public information officer (CPIO) of RBI told Mr Mittal, "As regards the inspection reports/ risk assessment reports for the years FY17-18 and FY18-19, we have issued notice under section 11(1) of the RTI Act to the bank/company concerned. On receipt of reply from the bank/company, further communication will be made."
"As regards the risk assessment report/ inspection report for the year 2019-20, it is informed that the supervisory process or action in the matter is not yet complete. Disclosure of such information at this stage is considered premature in terms of Para 77 of the Supreme Court judgement dated 16 December 2015 in 'Reserve Bank of India vs. Jayantilal Mistry Case' [2016 (3) SCC 525]. Hence the information is exempt from disclosure under Section 8(1)(a) of the RTI Act," the CPIO says.
While it might appear that the CPIO is right in asking banks and the finance company before revealing the information since it pertains to a ‘third party’, RBI, however, is not following the provisions of the RTI Act. Before furnishing the information, the CPIO must analyse whether it is exempt or not and then proceed with the RTI application.
While Section 11 is not a rejection, it is, however, incorrect in these cases. Section 11 of the Act works under the presumption that the information which RBI holds regarding these banks and financial institutions (FIs) under fiduciary capacity and is a third-party information and, hence, the public authority (RBI in this case) must seek the permission of the third parties involved before disclosing the information.
Fiduciary in legal parlance means, “any relationship existing between the parties to the transaction where one of the parties is duty bound to act with utmost good faith for the benefit of the other party. Such a relationship ordinarily arises where confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interests of the other party without the latter’s knowledge and consent.”
In the Reserve Bank of India vs Jayantilal N Mistry case
, the Supreme Court had said, "In the instant case, the RBI does not place itself in a fiduciary relationship with the financial institutions (though, in word it puts itself to be in that position) because, the reports of the inspections, statements of the bank, information related to the business obtained by the RBI are not under the pretext of confidence or trust. In this case neither the RBI nor the banks act in the interest of each other. By attaching an additional 'fiduciary' label to the statutory duty, the regulatory authorities have intentionally or unintentionally created an in terrorem (serving or intended to threaten or intimidate) effect.”
“Furthermore, the RTI Act under section 2(f) clearly provides that the inspection reports, documents etc. fall under the purview of 'Information', which is obtained by the public authority (RBI) from a private body,” the apex court observed.
In the judgement, the SC had conclusively stated that, “As in this case, the RBI is liable to provide information regarding the inspection report and other documents to the general public.”
In the reply to Mr Mittal's RTI application, the CPIO of RBI has cited para 77 of the same judgement. Para 77 of the Supreme Court judgement, however, talks about information sought by SS Vohra based on a written statement on 24 July 2009 made by the then finance minister in the Parliament and an order issued by the central information commissioner.
"This is a matter of concern since it involves the violation of policy guidelines initiated by the RBI and affects the public at large. Transparency cannot be brought overnight in any system and one can hope to witness accountability in a system only when its end users are well- educated, well-informed, and well-aware. If the customers of commercial banks remain oblivious to the violations of RBI guidelines and standards which such banks regularly commit, then eventually the whole financial system of the country would be at a monumental loss. This can only be prevented by suo motu (relating to an action taken by a court of its own accord) disclosure of such information as the penalty orders are already in the public domain.” This is what para 77 of Supreme Court judgement says in the Jayantilal Mistry case.
So, it looks like the CPIO did not even bother to read the apex court's judgement before giving a 'typecast' reply to Mr Mittal.
In the reply about providing reports of IL&FS for FY17-18, FY2018-19, and FY19-20, the CPIO told Mr Mittal the same reason quoting the SC judgement in the above case.
On sharing reports of HDFC, the CPIO says he partially transferred the application to the National Housing Bank (NHB) under Section 6(3) of the RTI Act, 2005, for furnishing a direct reply to Mr Mittal.
In case of Sahara India Financial Services or any entity of Sahara group registered with RBI, the CPIO says, "Inspection of Sahara India Financial Corp Ltd or Sahara India Corp Investment Ltd has not been conducted in the last three years (since 1 April 2018)."
Some two years ago, former central information commissioner (CIC) Shailesh Gandhi also had to face the delaying tactics of the RBI when he had asked for the audit and inspections reports of RBI and the banks.
At that time, Mr Gandhi had said, "It is obvious that the RBI is not being honest about receipt and dispatch of RTI responses. It is unfortunate that it does not recognise the efforts of the Supreme Court in matters clearly decided by it. If the RBI were to keep all the information on their website for all banks, instances like PMC would not occur."
While in the case of Mr Mittal, RBI has not refused the information directly, , it failed to follow various judgements given by the Supreme Court and also failed to follow the provisions of the RTI act. And whether there is a judgement from the apex court or any other authority, RBI's stance remains one of an elusive and 'above all' regulator, especially while sharing information with the public under the RTI Act.