Moneylife: New Delhi: Friday, August 05, 2016.
In a powerful
verdict, a Divisional Bench of Central Information Commissioners, Sharat
Sabharwal and Sudhir Bhargava ordered Union Bank of India (UBI) to pro-actively
disclose its mix business on a quarterly basis. The Bench at the Central
Information Commission (CIC) also observed that daily disclosure of its
business mix, is not exempted from the Right to Information (RTI) Act and
therefore should be provided to a citizen who seeks it through this route.
The order
dated 28 June 2016, states “…that disclosure of the information concerning the
daily business mix of a bank does not attract the exemptions from disclosure
available under Sections 8 (1) (a) and (d) of the RTI Act and is in larger
public interest. At the same time, we are of the view that such information regarding
daily business mix should be given to an RTI applicant only in respect of a
quarter, the business figures for which have already been made public in
keeping with the statutory requirements. This would ensure that even as the
information of daily business mix is made public for a particular period
through the RTI route, the public also has before it the figures for the end of
the quarter, put out by the bank in fulfilment of its statutory obligations.”
It is
interesting to note that it took three years from the time of RTI application
in 2013 to the final CIC decision in 2016, exposing the pendency issue.
The RTI
application:
On 16 May
2013, Thane-based Nanik Rajwani had filed the RTI application with Central
Public Information Officer (CPIO) of Union Bank of India on the backdrop of
irregularities performed by banks. In the RTI application he sought information
on.
a)
Details business mix of the bank for the months March and
April 2013. (Daily figures of total deposits, total advances and total business
mix).
b)
Details of Restructured accounts which have subsequently
turned NPA during three year period commencing from 1 April 2011 to 31 March
2013.
c)
Details of action initiated by the bank against Bank
Officials who have indulged in window¬dressing of the business mix parameters
in past three years.
d)
Details of action initiated against Bank officials for classification
of accounts as Standard subsequently classified into non-performing asset (NPA)
by statutory / Reserve Bank of India (RBI) auditors.
e)
Details of action initiated against bank Officials/
Statutory Auditors classification of
accounts as Standard subsequently classified into NPA by RBI Auditors.
CPIO denies
information claiming it will affect “economic interest”
The CPIO
on 26 June 2013 denied the information stating that it would affect the
economic interest of the bank. He denied information as follows:
"(a) of
the application, stated that the information was exempted from disclosure under
Section 8 (1) (a) of the RTI Act, since its disclosure would prejudicially
affect the economic interest of the Respondent Bank, which is a ‘State’ within
the meaning of article 12 of the Constitution of India.”
He claimed
exemption from disclosure of information on point (a) under Section 8 (1) (d)
also.
The
information on point (b) was provided, but with regard to points (c) to (e), the
CPIO responded that the information sought was not available because it was not
held in the form requested and required analysis of data for compilation.
First
Appellate Authority (FAA) denies information claiming “commercial confidence”
In his order
on 31 August 2013, the FAA stated that the available information had been
provided and added that the information regarding details of the business mix
of the bank, sought at point (a), was a matter of commercial confidence under
Section 8 (1) (d) and its disclosure would prejudicially affect the economic
interest of the bank, which is a ‘State’ within the meaning of article 12 of
the Constitution of India.
Division
bench hearing on 13 June 2016
The RTI
applicant, Nanik Rajwani argued as follows:
•
His request is three years old and he is yet to get the
information
•
In his view, the information sought would reveal how the
actions of the bank are prejudicially affecting the interests of its
shareholders. He added that the bank sanctions credit facilities, which remain
un-utilised. On the last day of the quarter the un-utilised credit is disbursed
to the borrowers and the amount so generated is transferred to their deposit
accounts, thereby artificially enhancing both the advances and the deposits of
the bank for the purpose of disclosure to public
•
The bank is not furnishing the information of daily
business mix because they are apprehensive that it would reveal irregularities
committed by them
•
They have computerised data of the daily business mix of
the bank and therefore it can be easily disclosed.
•
The Head Office of the bank does not have to compile such
data by getting it from different branches, but gets it from its Regional
Offices
•
Price of the shares of the bank is 50% below the market
value because the market does not trust the business data put out by the bank.
Therefore, disclosure of the information sought by him is also a matter of
larger public interest because the shareholders of the bank would come to know
the correct picture
•
As peer RBI circulars, the bank has to report its
business mix to the RBI on a fortnightly basis and in the event of their not
doing so, they are liable to be penalised
•
The bank does not take action against the officers
indulging in window-dressing. No action is taken against those officers and
statutory auditors, who classify certain loan accounts as standard even though
subsequently the same have to be classified as NPA
•
The information concerning the action taken by bank
against officers was denied to him because he did not write the RTI application
in the correct format.
The Union
Bank argued:
•
That, they are a commercial bank listed with SEBI, with
shareholding of the government and public. SEBI requires them to publish their
business figures at specified intervals and this is being done as per the
statutory requirements. Disclosure of the daily business mix figures would have
an adverse impact not only the Union Bank but the entire banking industry.
•
Certain figures are reported by the bank to the RBI in
keeping with their regulatory requirements in the context of cash reserve ratio
etc. but these are not required to be made public. Since Union Bank is a
government bank, the disclosure of the daily mix figures, would hurt the
interest of the bank, would also affect adversely the national interest.
•
Revelation
of daily business
mix could lead to comparisons with the business of
other banks and result in a run on the bank. In case, the entire banking
industry is required to put out the business mix figures on a daily basis, they
would be willing to so do so. However, they would not wish to be singled out by
being made to disclose daily figures in response to RTI applications.
•
The lower prices of their shares are because of the
overall situation of the economy and not on account of the public not trusting
the figures put out by them.
The
division bench of CIC observed:
•
Comparison of the figures for a particular quarter with
those of previous quarters could have the same adverse impact on the image of
the bank that they claim would result from disclosure of the daily figures.
•
The bank is in any case abiding by the statutory
regulations to make public its business mix figures on a quarterly basis. There
is no reason to believe that disclosure of daily figures in response to an RTI
application would make the situation any worse for them.
•
It could not be the case of the bank that they would wish
to retain the confidence of public and their shareholders by hiding certain
information.
•
On the contrary, it can be argued that disclosure of such
information would enable citizens and shareholders to make informed decisions
about their dealings with the bank.
•
As per Section 42 (2) of the Reserve Bank of India Act,
every scheduled bank has to send to the RBI, on a fortnightly basis, a return
containing the amount of its demand and time liabilities, the amount of its
borrowings from banks in India, the total amount of legal tender notes and
coins held by it in India, the balance held by it at the Bank in India, the
balance held by it in other banks, the investment in central and state
government securities, the amount of amount of advances in India and the inland
bills purchased and discounted in India.
•
On the basis of the returns received from scheduled
banks, the RTI makes public, on a fortnightly basis, consolidated figures in
respect of business of all scheduled commercial banks, concerning liabilities
to the banking system, liabilities to others, borrowings from Reserve Bank,
cash in hand and a balance with Reserve Bank, assets with the banking system,
investments and bank credit.
•
The information put out also covers variations over the
previous fortnight, previous financial years; as well as comparison on a year
to year basis. If publication of such consolidated information in respect of
all the scheduled banks in the country does not hurt the economic interests of
the State, there is no reason why disclosure of the daily business mix of Union
Bank should end up doing so.
•
Any action that results in dissuading commercial entities
from indulging in practices such as window-dressing would be in larger public
interest.
•
Disclosure of information concerning the daily business
mix of bank would be a worthwhile step in the above context.
CIC
Decision
•
The disclosure of the information concerning the daily
business mix of a bank does not attract the exemptions from disclosure under
Section 8 (1) (a) and (d) of the RTI Act and is in larger public interest
•
At the same time, we are of the view that such
information regarding daily business should be given to an RTI applicant only
in respect of a quarter, the business figure for which have already been made
public in keeping with statutory requirements
•
This would ensure that even as the information of daily
business mix is made public for a particular period through the RTI route, the
public also has before it the figures for the end of the quarter, put out by
the bank in fulfilment of the statutory obligations.
• Accordingly, the CPIO of the Respondent Bank is directed
to provide to the Appellant the information in response to point (a) of his RTI
application dated 16 May 2013. This information should be provided, free of
charge, within thirty days of the receipt of this order.
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