Live
Mint: New Delhi: Thursday, 17 December 2015.
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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