The Supreme Court has slammed the Reserve Bank of India for refusing to furnish information under the RTI Act about the irregularities of financial institutions and other commercial banks.
A bench of Justices M.Y. Eqbal and C. Nagappan said “RBI is supposed to uphold public interest and not the interest of individual banks.
RBI is clearly not in any fiduciary relationship with any bank. RBI has no legal duty to maximise the benefit of any public sector or private sector bank, and thus there is no relationship of ‘trust’ between them.
RBI has a statutory duty to uphold the interest of the public at large, the depositors, the country’s economy and the banking sector.”
Writing the judgment dismissing RBI’s appeal challenging central information commission’s order directing disclosure, Justice Eqbal said, “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. The baseless and unsubstantiated argument of the RBI that the disclosure would hurt the economic interest of the country is totally misconceived.”
The bench of Justices Eqbal and Nagappan said the CIC has given several reasons to state why the disclosure of the information sought by the respondents would hugely benefit public interest, and non-disclosure would be significantly detrimental to public interest and would not be in the economic interest of India.
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.
The bench noted that exemption from disclosure contained in Section 8(1)(e) of the RTI Act applies to exceptional cases and only with regard to certain pieces of information, for which disclosure is unwarranted or undesirable. If information is available with a regulatory agency not in fiduciary relationship, there is no reason to withhold the disclosure of the same. The financial institutions have an obligation to provide all the information to the RBI and such an information shared under an obligation/ duty cannot be considered to come under the purview of being shared in fiduciary relationship.
This attitude of the RBI, the bench said “will only attract more suspicion and disbelief in them. RBI as a regulatory authority should work to make the banks accountable to their actions. We have surmised that many financial Institutions have resorted to such acts which are neither clean nor transparent. The RBI in association with them has been trying to cover up their acts from public scrutiny. It is the responsibility of the RBI to take rigid action against those banks which have been practicing disreputable business practices.”
