Legally India: New Delhi: Friday, December 18, 2015.
The Supreme
Court has increased transparency in the banking sector by holding that 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.
The court was
hearing a bunch of petitions related to citizens asking information regarding
reports made by RBI after inspection of financial institutions under Banking
Regulations Act, 1949.
A bench of
justices MY Eqbal and C Nagappan said that many public information officers
routinely denied information sought under RTI “under the guise of one of the
exceptions” provided under the RTI Act, 2005 referring to the provision of
exception under economic interest.
The court
chose to root for the cause of an informed citizen as quoted in the report:
“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” but
also added a caveat that the central bank could not be “put in a fix by making
it accountable to every action taken by it”.
The bench was
quoted as saying, “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 ideal of
government by the people makes it necessary that people have access to
information on matters of public concern. The free flow of information about
affairs of government paves way for debate in public policy and fosters
accountability in government.
Describing as
“misconceived” the contention by the RBI that the disclosure of information
sought under RTI would go against the economic interest of the nation, Justice
Eqbal speaking for the bench said.
“Economic
interest of a nation in most common parlance are the goals which a nation wants
to attain to fulfil its national objectives. It is the part of our national
interest, meaning thereby national interest can’t be seen with the spectacles
(glasses) devoid of economic interest.”
Holding that
the RBI was supposed to uphold public interest and not the interest of
individual banks by, the court said “The RBI has a statutory duty to uphold the
interest of the public at large, the depositors, the country’s economy and the
banking sector.
“Thus, the
RBI ought to act with transparency and not hide information that might
embarrass individual banks. It is duty bound to comply with the provisions of
the RTI Act and disclose the information sought by the respondents herein.”
“RBI is
clearly not in any fiduciary relationship with any bank. 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.
“RBI has a
statutory duty to uphold the interest of the public at large, the depositors,
the country’s economy and the banking sector,” the court said reminding the
apex bank of its statutory role as a regulator.
Thus, the
court said the “RBI ought to act with transparency and not hide information
that might embarrass individual banks. It is duty bound to comply with the
provisions of the RTI Act and disclose the information sought by the
respondents herein.”
The court
said that while addressing the question whether all the information sought for
under the RTI Act can be denied by the RBI and other banks to the public at
large on the ground of economic interest, commercial confidence, fiduciary
relationship with other bank on the one hand and the public interest on the
other.
The RBI had
moved the Supreme Court challenging the CIC order asking the apex bank to
disclose information sought under the RTI by five people on the violation of
the RBI guidelines by the various public sector banks and the information on
defaulters of loan.
Dismissing
the plea by the RBI in five cases, the court said, “We have given our anxious
consideration to the matter and came to the conclusion that the Central
Information Commissioner has passed the impugned orders giving valid reasons
and the said orders, therefore, need no interference by this court.
Having
rejected the plea by the RBI, the court also said that neither the fundamental
rights nor RTI have been provided in absolute terms.
“It is true
that gone are the days of closed doors policy making and they are not
acceptable also but it is equally true that there are some information which if
published or released publicly, might actually cause more harm than good to our
national interesta if not domestically it can make the national interests
vulnerable internationally,” the court said in its order.
The court
said that when it comes to national economic interest, disclosure of
information about currency or exchange rates, interest rates, taxes, the
regulation or supervision of banking, insurance and other financial
institutions, proposals for expenditure or borrowing and foreign investment
could in some cases harm the national economy, particularly if released
prematurely.
However, the
court said “lower level economic and financial information, like contracts and
departmental budgets should not be withheld under this exemption”.
This, the
court said “makes it necessary to think when or at what stage an information is
to be provided i.e., the appropriate time of providing the information which
will depend on nature of information sought for and the consequences it will
lead to after coming in public domain.”
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