Is Reserve Bank of India abusing RTI?

Financial Express: Opinion: Friday, June 28, 2019.

After the prolonged controversy over whether RBI should disclose names of willful loan defaulters and publish inspection reports of banks RBI had posited that this would violate its fiduciary responsibility with the banks and harm economic interests of the nation the Supreme Court ruled that it had to. In fact, in its 2015 RBI vs. Jayantilal N Mistry judgment, the apex court had asked the central bank to make public the inspection reports of bank as well as details of willful defaulters, saying that the central bank had no fiduciary relationship with the banks. It also maintained that RBI had a statutory duty to uphold public interest and should not hide information that might embarrass individual banks. The disclosure of bank inspection reports was critical since it would have allowed RTI applicants to know if RBI had detected problems with bank loans and when, and armed with that information, the public could have asked the banking regulator why action was not taken, if that was indeed the case. RBI, however, in 2016, came out with a disclosure policy that, transparency activists claim, bypassed the landmark Jayantilal N Mistry judgment. According to a petition filed with the SC, one of the exemptions extends to inspection reports within the purview of the department of banking supervision. However, in its April 26 judgment this year, the SC said it was giving RBI one last opportunity to withdraw the disclosure policy, to the extent that this carried exemptions contrary to the 2015 judgment, and directed it to furnish all information relating to inspection reports and other material.

Despite this, as Moneylife reports, Vivek Velankar, a Pune-based RTI activist was not provided the inspection reports that he had requested for Shivajirao Bhosale Sahakari Bank (SBSB), on whose operations RBI placed certain restrictions. In this case, RBI wrote to the CEO of the bank under Section 11 of the RTI Act, notifying the bank of its intention to disclose the report. This would allow the bank to register its objection and RBI would have to consider it before releasing the RTI information in other words, a whole new legal process would get started.

It is not clear if RBI is abusing Section 11 or simply abiding by it. Given the SC ruling, it should have asked the SC for clarification on how to deal with appeals provision under the section and whether banks had the right to oppose such disclosure. Had RBI done this, the SC could have perhaps asked the Centre to amend the transparency law or create a carve-out for RBI to comply with its order. It could have also possibly asked the Centre to re-look the Banking Regulation (BR) Act; while, under Section 35 (5) of the BR Act, the Centre can publish inspection reports of banks, or parts thereof, after giving a reasonable notice to the latter, Section 28 allows RBI to disclose any information gleaned under the provisions of the BR Act, if it deems it to be in public interest. Ideally, RBI should just seek clarification from the SC before its latest action invites contempt charges.