SFIO Suspects RBI Top Official’s Collusion with IL&FS
Aravind Natarajan 12 June 2019
In a recent addition to the Infrastructure Leasing and Financing Services (IL&FS) crisis, the Serious Fraud Investigation Office (SFIO) suspects that a senior official from the Reserve Bank of India (RBI) may have had some role to play in turning a blind eye to the non-compliance with various inspection report findings, says a report in the Time of India.
The SFIO has asked the central bank to conduct an internal investigation to find out why there was no action against IL&FS for ignoring RBI's directions in connection with its inspection reports. The report suggests that Ramesh C Bawa, CEO (chief executive officer) of IL&FS Financial Services (IFIN) allegedly had some links with a senior official from RBI, although there has been no evidence of quid pro quo on part of the RBI official. 
The RBI inspection of 2015 had raised several issues with IFIN but no action was taken until 2017 and it was given time until 2019 for certain compliances—but IL&FS’s parent company itself started defaulting on its obligations in 2018. 
This background is interesting because the RBI has been steadily stonewalling Right to Information (RTI) queries from Moneylife as well as others activists with regard to IL&FS. 
One of the RTIs filed with them was concerning details and information of the officers at the RBI who were responsible for monitoring IL&FS. The RBI however, refused to give us the information saying that revealing such information could pose a risk to the officers’ life.
We had also filed another RTI with RBI asking them for copies of annual inspection report conducted by the RBI concerning IL&FS for the past three years. The public information officer (PIO) of the RBI refused to give the information. The PIO, in his response observed, “The Central government has ordered investigation into the affairs of the IL&FS Ltd and therefore requested for the inspection reports relating to the company. As investigation into the affairs of the company is still pending with the SFIO, the information sought is exempted from disclosure under sub clause (h) of sub-section (1) of Section 8 of the Right to Information Act, 2005.”
The PIO also refused to give the information regarding IL&FS inspection report quoting Section 45NB of the RBI Act, 1934. This refusal to give information quoting Section 45NB of the RBI Act is both illegal and wrong. 
Information can only be denied under Section 8 or Section 9 of the RTI Act. Further to that, the RTI Act categorically states that as far as dispersal of information is concerned, the RTI Act takes precedence over every other existing act and this includes the Official Secrets Act. The Act reads, “The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in the Official Secrets Act, 1923 (19 of 1923), and any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.”
As far as denial of information under Section 8(i)(h) is concerned, it states that information which would impede the process of investigation cannot be given, the operative word being impede which effectively means that the PIO refusing information using this clause has to therefore show how it would impede. In case they cannot show how that will happen, information has to given. 
Given how the information was refused illegally, we filed a first appeal. The first appellate authority (FAA) of the RBI again upheld the decision of the PIO observing that,” As regards the appellant's request of providing him with the copies of the annual inspection report conducted by RBI pertaining to IL&FS, I agree with the CPIO that the said request for information of the appellant cannot be acceded to.”
The FAA further observed, “As Section 45NB of the RBI Act deals with specific information relating to the NBFCs, the said provision cannot consider to be over-ridden by the provisions of  the Right to Information Act which is a general legislation dealing with every kind of information.” This decision of the FAA is blatantly in violation of the RTI Act’s rules. 
The FAA also upheld the PIO’s decision to not reveal information using Section 8(i)(h) even though no just reasoning was provided as to how revealing such information would impede the process. 
5 years ago
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Ramesh Jaradhara
5 years ago
In my opinion, in such cases, you shall make an appeal to the Central Information Commission for providing information which was not given out by RBI, citing improper provisions of RTI Act. The slack attitude of RBI induce many FIs/NBFCs to indulge in illegal activities causing huge losses of public money.
Ramchandra Karve
5 years ago
With the passage of time amendments need to be carried out to the RTI Act 2005. The exemptions Certain clauses of the RTI Act which exempt a body from provide certain information besides defeating the purpose for which said Act was introduced, also encourage organisations to indulge in malpractices. Ramchandra Karve retired RBI officer and RTI activist
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