RBI Continues to Defy Supreme Court’s RTI Ruling on Sharing Inspection Reports of Banks
Continuing with its tradition to disregard the Right to Information (RTI) Act, the Reserve Bank of India’s (RBI) once again failed to uphold the provisions of the Act and has failed to follow Supreme Court decision on providing information on bank inspection reports.
In a recent RTI request filed by retired central information commissioner (CIC) Shailesh Gandhi, the delaying tactics of the central bank while responding are quite evident.
Mr Gandhi had filed an RTI seeking information about Saraswat Co-operative Bank. He was seeking information on documents such as;
1. Copies of RBI’s Audit reports and inspection reports.
2. Copies of any warnings or advisories issued to the bank
3. Details of any fines or penalties levied on the bank.
4. The grade allotted to the bank.
5. Total amount of Non-Performing Assets.
6. Report on quality of borrowers.
7. List of top five Defaulters with the amounts of default
This RTI application was filed by Mr Gandhi on 25th October and was sent by speed-post which as per the tracking was delivered to the RBI four days later on 29 October 2019.
However, in its reply, the central public information officer (CPIO) of RBI stated that he received the RTI application on the 6 November 2019 and not before that, against the delivery date of 29th October.
What the CPIO of RBI did was to send a letter to Saraswat Bank seeking its consent before sharing any information. In the letter, RBI says, “Since the information sought by the application related to your bank, a notice is therefore, given under section 11(1) read with section 11(2) of the act to enable you to make a written submission within 10 days from the date of receipt of this notice, as to whether the documents sought by the applicant may be disclosed or not along with the reasons for the same indicating clearly for each of the documents.”
While it might seem like the RBI is right in asking Saraswat Bank before revealing the information since it pertains to a ‘third party’, they are however not following the provisions of the RTI Act. Before furnishing the information, the PIO must analyse whether it is exempt or not and then must proceed with the RTI application.
While section 11 is not a rejection, it is however incorrect in this case. Section 11 of the Act works under the presumption that the information, which RBI holds regarding Saraswat Bank is held under fiduciary capacity and is a third party information hence the RBI has to seek the permission of the third party involved before disclosing the information
Fiduciary in legal parlance means, “any relationship existing between the parties to the transaction where one of the parties is duty bound to act with utmost good faith for the benefit of the other party. Such a relationship ordinarily arises where confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interests of the other party without the latter’s knowledge and consent.”
As per a Supreme Court (SC) ruling in the “Reserve Bank Of India vs Jayantilal N. Mistry
” the apex court observed, “In the instant case, the RBI does not place itself in a fiduciary relationship with the Financial institutions (though, in word it puts itself to be in that position) 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 court further observed, “Furthermore, the RTI Act under Section 2(f) clearly provides that the inspection reports, documents etc. fall under the purview of “Information” which is obtained by the public authority (RBI) from a private body.”
In their judgement, the SC conclusively stated that, “As in this case, the RBI is liable to provide information regarding inspection report and other documents to the general public.”
The SC categorically has defined and has cleared that RBI does not hold information of banks in fiduciary capacity and neither is the inspection report obtained from private entities 3rd party information. As per the RTI act as well, the RBI is legally bound to declare the inspection reports which are ideally supposed to be declared suo-moto on their website. The RBI however does not declare them on their own and neither do they reveal inspection reports when asked under RTI.
As per the RTI Act, information can only be exempted on the basis of provisions which are mentioned under section 8 and section 9.
In the past as well, the RBI has refused to give inspection reports under the RTI act. Girish Mittal, an RTI activist had been filing requests with the RBI seeking inspection reports of various banks, which they had stone-walled until the SC weighed in.
While in this case, the RBI has not refused the information directly, they have however failed to follow various SC rulings and also failed to follow the provisions of the act itself.
"It is obvious that the RBI is not being honest about receipt and dispatch of RTI responses. It is unfortunate that it does not recognise the efforts of the Supreme Court in matters clearly decided by it. If the RBI were to keep all the information on their website for all banks, instances like PMC would not occur," Mr Gandhi, the former central information commissioner, concluded.
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