RBI should not hide information that might embarrass banks: SC cracks whip on ‘absurd’ arguments

The Supreme Court today held that the Reserve Bank of India is duty bound to comply with the provisions of the Right to Information Act, 2005. The court was hearing RBI’s appeals against orders of the Central Information Commission directing the RBI to provide information sought for..A Bench of MY Eqbal and C Nagappan JJ was hearing a slew of transfer petitions from the Bombay and Delhi High Courts in this regard..The petitioners had sought information on the findings of the RBI during the routine inspection of banks in the country. One of the petitions had also sought information on details of default in loans taken from public sector banks by industrialists, the top 100 defaulters, etc..The banking regulator had refused such information on the grounds of economic interest, commercial confidence, and fiduciary relationship with other banks, as per Section 8(1) of the RTI Act..Senior Advocate TR Andhyarujina represented RBI, argued that certain provisions of the Banking Regulation Act, 1949 preclude the RBI from publishing information to the public. The specific provisions referred to were Section 34A, which states that production of documents of confidential nature cannot be compelled; and sub-section (5) of Section 35, under which the RBI may carry out inspection of any bank but its report can only be disclosed if the Central Government orders the publishing of the report..Moreover, Section 17(4) of the Credit Information Companies (Regulation) Act, 2005 was referred to, under which credit information received by the credit information company cannot be disclosed to any person. Andhyarujina also submitted that the RTI Act is a general provision which cannot override specific provisions relating to confidentiality in earlier legislation..Advocate Prashant Bhushan, appearing for one of the Respondents, begged to differ. He pointed out that the RTI Act, 2005 contains a clear provision (Section 22) by virtue of which it overrides all other Acts..The Bench concurred with this view, berating the regulator for misleading the public by stating that it was in a fiduciary relationship with other banks. It held,.“In the instant case, the RBI does not place itself in a fiduciary relationship with the Financial institutions 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 effect.”.The Bench went on to chide the RBI for shirking in its duty as a watchdog to disclose information to the general public..“RBI is supposed to uphold public interest and not the interest of individual bank…RBI has no legal duty to maximize the benefit of any public sector or private sector bank…Thus, 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.”.It also dismissed the RBI’s intentions of preserving economic interest as absurd and baseless..“RBI’s argument that if people, who are sovereign, are made aware of the irregularities being committed by the banks then the country’s economic security would be endangered, is not only absurd but is equally misconceived and baseless.”.On an aside, the Court also observed the growing trend of institutions to evade public queries under the guise of one of the exceptions given under Section 8 of Act..Read the judgment here: