Several banks are now coming together and moving the Supreme Court (SC) to oppose Reserve Bank of India's (RBI) notice for disclosing inspection reports under the Right to Information (RTI) Act. State Bank of India (SBI), Punjab National Bank (PNB), Union Bank of India, Canara Bank, Kotak Mahindra Bank, IDFC Bank have all joined hands with other lenders, who are already in the SC to oppose RBI’s notice and thus nullify the judgement in ‘Jayantilal Mistry’ case (2015) and the contempt petition in ‘Girish Mittal’ case (2019).
All these matters have now been tagged together and RTI activist Girish Mittal is the intervener in the petition. Senior advocate Prashant Bhushan is representing Mr Mittal in the case.
These banks have hired top lawyers like Harish Salve and Mukul Rohatgi to represent them in SC.
While opposing allowing disclosure of names of big defaulters under RTI, the counsel for SBI told the apex court, "How can we break customers' trust by disclosing their personal info?"
The counsel for SBI is even reported to have suggested that “people have made a business out of RTI” and argued that the Bank enjoys trust and faith of customers, which it cannot break. The Bank further contended that the information that is being sought is confidential under law, and there is a statutory embargo on it.
Earlier this month, the SC had refused the plea by PNB and Union Bank of India to stay notices by RBI to disclose information related to defaulters list, inspection reports.
HDFC Bank argued that “the RBI’s inspection reports contains information about the biggest borrowers and several provisions under the RTI Act prohibit the disclosure of third-party information.” Further, the bank pointed out that the Supreme Court has held privacy as a fundamental right, so the account details, the quantum of transactions of individuals cannot be disclosed.
"Suppose Tata, Birla Group want to borrow money to develop electric cars, this commercially sensitive information is a part of the inspection reports," HDFC Bank contended.
Questioning the wisdom, counsel for HDFC Bank even asked “Why does a layman need inspection reports of 14 banks?”
A two-judge bench had asked RBI to disclose the list of top defaulters for the Bank. The counsel has urged the SC to refer the matter to a three-judge bench and not hear any contempt plea against the order passed by the two-judge bench till then.
HDFC Bank and Axis Bank have also argued that RTI Act can only apply to government offices and entities, not private banks. They contended that RTI activists are seeking information about customers of private banks in the garb of RBI's inspection reports, and the disclosure will harm the competitive position of third parties.
As per RBI’s directives, inspection reports are kept confidential even from the employees of the bank.
The matter has now been posted for 22nd July.
Explaining the nuances of the case to Moneylife, RTI activist Mr Mittal said, “Banks have ganged up together and approached the SC to set aside the judgement in the Jayantilal Mistry case. It is a strange case and the malafide intentions of the petitioner banks are writ large as they seek to obtain orders from the SC where both the petitioner and the respondents (primarily RBI) are virtually seeking the same relief. The direct respondents (Union of India) will not have any objections to the prayer sought by the petitioner banks.”
“RTI is a fundamental right of the citizens as has been declared by the SC in many landmark judgements. The public has every right to know what is happening with the bank as they have invested hard-earned money in these banks. There must be complete transparency in the functioning of the banks that is why it is important for the information in the RBI’s inspection reports to be shared in public domain. Over the last five years, banks have been approaching the SC on one pretext or the other to essentially set aside the landmark Jayantilal Mistry judgement,” Mr Mittal stated while trying to highlight the importance of sharing inspection report contents in public domain.
Some time back, the banks had filed a miscellaneous application in the supreme court and Mr Mittal had contested it vigorously through his lawyer Prashant Bhushan. However, the banks did not even deem it necessary to serve a copy of the writ petition for him to effectively intervene and argue in the case.
“Banks had sought an interim relief by means of stay on the disclosure of inspection reports -- which has so far been refused by the Supreme Court. However, despite the refusal of the apex court and the Jayantilal Mistry judgement, the RBI has still not released the inspection reports, which I had asked for vide my RTI petition dated 1 May 2021. I had filed a first appeal also on 4th June, which too has not been responded so far. It is clear that RBI is in contempt of the Jayatilal Mistry case,” Mr Mittal added.
According to Shailesh Gandhi, former central information commissioner and RTI activist, this is a case of complete defiance of the law of the land by those with money and power. He says, “This is clear defiance of a law passed by the Parliament, which has been specifically reiterated by the Supreme Court. This is trying to prove that those who have money and power can follow laws if they wish or defy them with impunity. If the court gives in to such tactics the nation would be very worried."
To drive home his point, Mr Gandhi quoted the judgement in Mardia Chemicals Ltd vs Union of India decided on 8 April 2004.
A constitution bench of the Supreme Court was considering the validity of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act and recovery of non-performing assets (NPAs) by banks and financial institutions in India. While discussing whether a private contract between the borrower and the financing institution or bank can be interfered with, the SC observed:
“…it may be observed that though the transaction may have a character of a private contract yet the question of great importance behind such transactions as a whole having far reaching effect on the economy of the country cannot be ignored, purely restricting it to individual transactions more particularly when financing is through banks and financial institutions utilizing the money of the people in general namely, the depositors in the banks and public money at the disposal of the financial institutions. Therefore, wherever public interest to such a large extent is involved and it may become necessary to achieve an object which serves the public purposes, individual rights may have to give way. Public interest has always been considered to be above the private interest. Interest of an individual may, to some extent, be affected but it cannot have the potential of taking over the public interest having an impact in the socio-economic drive of the country.”
Mr Mittal had doggedly pursued RBI right up to the SC, before the RBI was forced
(after getting strictures and strict warnings from the SC) to share the inspection reports of SBI, ICICI Bank, Axis Bank and HDFC Bank under RTI in July 2019.
Earlier several banks, including Canara Bank, Bank of Baroda, UCO Bank and Kotak Mahindra Bank had filed applications in the top court seeking a recall of the 2015 judgement in the Jayantilal N Mistry case, claiming that the verdict had far-reaching consequences and that they were directly and substantially affected by it.
In the judgement, the SC had conclusively stated that, “As in this case, the RBI is liable to provide information regarding the inspection report and other documents to the general public.”
However, it appears that neither the banks nor the banking regulator are interested in letting common citizens know details about bank inspection reports.
These articles are a great eye-opener for the public to appreciate the actual substance below the surface and the festering issues like poor governance, risk management and lethargy in going after the bad loan recoveries. This explains why there is an all-around effort to keep bank inspection reports hidden.
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