RBI holds information of banks/financial institutions:
Under the Reserve Bank of India, Act, 1934, Reserve Bank of India (RBI) can interalia, call for information from and give directions to financial institutions[1]. Under Section 35 of the Banking Regulation Act, 1949, it can conduct inspection of any banking company at any time and can impose penalty on them in case of contravention of its directions. Thus, at any given time, RBI holds various kinds of information of the financial institutions of the country. Further, under Section 28 of the Banking Regulation Act, 1949, and the Credit Information Companies (Regulation) Act, 2005, it can publish information obtained by it in public interest.
RBI and the provisions of RTI Act, 2005:
Under Section 2(f) of the RTI Act, 2005 (RTI Act), ‘information’ is defined to include any information relating to any private body, which a public authority can access under any other law from it. In view of this provision, the RTI applicants apart from seeking RBI specific information, often seek information obtained by RBI from the public and private banks under other Statutes. Thus, in the year 2006, one Ravin Ranchchodlal interalia, sought copies of inspection reports along with the action taken on them from RBI in respect of the Saraspur Nagrik Sahakari Bank (Saraspur Bank). Central Public Information Officer (CPIO), RBI denied inspection report under Section 8(1) (e)[2] of the RTI Act, holding that information in the inspection report was received by RBI in fiduciary relationship from Saraspur Bank.
On appeal to the Central Information Commission (CIC), the Central Information Commisioner vide its order[3] dated 6.9.2006, directed RBI to disclose the copy of inspection report, after due application of Section 10 (1)[4] of the RTI Act, 2005. Subsequently, however, the Deputy Governor of RBI filed a letter dated 21.9.2006 to CIC interalia, submitting that:
-“The inspection carried out by RBI often bring out weaknesses in the financial institutions, systems and management of the inspected entities. Therefore, disclosure can erode public confidence not only in the inspected entity but in the banking sector as well. This could trigger a ripple effect on the deposits of not only one bank to which the information pertains but others as well due to contagion effect”.
– Disclosure of inspection reports as ordered by the Commission would not be in the economic interest of the country and such disclosures would have adverse impact on the financial stability.
– It would not be possible to apply section 10(1) of the RTI Act to the inspection report as portion of such reports when read out of context result in conveying even more misleading messages.
In view of the aforesaid letter, the CIC decided to reconsider the matter by its Full Bench.
The full bench CIC decision:
After hearing the contentions and submissions of both sides and relying upon the observations of the Hon’ble Punjab & Haryana High Court in RBI Vs. Central Government Industrial Tribunal[5] which had opined that the results of inspections of the scheduled banks conducted by RBI and the correspondence between them are highly confidential matters, their disclosure to public might easily result in loss of confidence or even panic……the claim of RBI that the reports of the inspection and the correspondence are documents which relate to affairs of State is justified……once a certain class of documents is held to relate to affairs of State and privilege is claimed by virtue of their falling within this class by the head of the department, then, it is not open to the Court/Tribunal to question this claim and “to assert the right to examine the documents themselves for the purpose of being satisfied on the point whether they relate to the affairs of State and to what extent their disclosure will not be harmful” [6]the full bench of CIC decided that the RBI is entitled to claim exemption from disclosure under Section 8(1) (a)[7] of the RTI Act “if it is satisfied that the disclosure of such report would adversely affect the economic interests of the State. The RBI is an expert body appointed to oversee this matter and we may therefore rely on its assessment… In view of what has been decided above, it is no more necessary to go into the question of applicability of section 8(1) (e) of the Act”.
Change in CIC’s stance:
However, later, in a spate of decisions, such as Jayantilal N. Mistry[8], Sanjay Sitaram Kurhade[9], Raja M Shanmugam[10], A. Venugopal[11] and others, when the Central Public Information Officer (CPIO)/RBI sought exemption from disclosure of information under Sections 8(1) (a), 8(1) (e), 8(1) (h)[12] of the RTI Act, a single bench of Information Commission directed RBI to interalia provide its inspection and audit reports, inspection findings, name of top defaulters who did not repay their loans to Public Sector Banks, details of fines and show cause notices issued by it against certain Banks largely on the ground that even if the information is exempted under Sections 8(1) (a), 8(1) (e) and 8(1) (h) of the RTI Act, Section 8 (2)[13] of the RTI Act would mandate disclosure of information.
RBI filed writ petitions against these directions in the High Courts of Delhi and Bombay which were subsequently transferred to and decided by Supreme Court in the case of Reserve Bank of India Vs. Jayantilal N. Mistry[14].
Reserve Bank of India Vs. Jayantilal N. Mistry:
The specific stand of RBI before the Supreme Court was that the information sought is exempted under Section 8(1) (a), 8(1) (d) and 8(1) (e) of the RTI Act. The disclosure of information would prejudicially affect the economic interests of the State. The single bench of CIC completely failed to observe the decision of the full bench of CIC in Ravin Ranchchodlal Patel and erred in holding that Section 8 (2) would apply. If the RTI Act overrides the various provisions of special statutes such as Section 34 A, Section 35 (5) of Banking Regulation Act, 1949, Section 45 E, Section 45 E (3) of the Reserve Bank of India Act, 1934, Section 17 (4), Section 20, Section 22 of the Credit Information Companies (Regulation) Act, 2005 which confer confidentiality in information obtained by RBI, then these provisions will be overruled by the RTI Act. Section 22 of the RTI Act cannot have nullifying effect on earlier statutes in relation to confidentiality.
On hearing both the sides, the Hon’ble Supreme Court was of the view that the primary question is whether the RBI has rightly refused to disclose information on the ground of having a fiduciary relationship with the banks. It observed that since RBI does not obtains the reports of inspections, statements of banks, information related to business from the Financial Institutions under the pretext of confidence and trust, it is not in a fiduciary relationship with them. “In this case neither the RBI nor the Banks act in interest of each other. By attaching an additional ‘fiduciary’ label to the statutory duty, the Regulatory authorities have intentionally or unintentionally created an interrorem effect….. RBI is supposed to uphold Public Interest and not the interests of individual banks….. It is duty bound to comply with the provisions of the RTI Act and disclose the information sought by the respondents herein”.
Supreme Court also held that the RTI Act overrides all earlier statutes in order to achieve its objective and the only exceptions to disclosure of information are those listed under Section 8 (1) of the RTI Act.
As regards the contention of RBI that disclosure of information would prejudicially affect economic interest, the court found it to be misconceived. However, it dwelt in detail on ‘national economic interest’ and took the view that “…disclosure of information about currency or exchange rates, interest rates, taxes, the regulation or supervision of banking, insurance and other financial institutions, proposals for expenditure or borrowing and foreign investment could in some cases harm the national economy, particularly if released prematurely. However, lower level economic and financial information, like contracts and departmental budgets should not be withheld under this exemption. This makes it necessary to think when or at what stage an information is to be provided i.e. the appropriate time of providing the information which will depend on the nature of information sought for and the consequences it will lead to after coming in public domain”.
The Supreme Court upheld the directions of the single bench of the Information Commission to RBI to disclose the information sought by the RTI Applicants.
Subsequent to the decision of the Supreme Court, RBI formulated a Disclosure Policy dated 30.11.2016 listing the categories of information which were to be exempted from disclosure by its CPIOs. The exemption related to Department of Banking Regulation exempted the information relating to specific supervisory issues emanating from inspection or scrutiny reports received from other supervisory departments. Inspection reports falling within the purview of Department of banking supervision were also exempted. Any information obtained from/submitted by banks/Financial Institutions and held by RBI in a fiduciary capacity was also exempted. Further, when an Applicant applied for information relating to inspection reports of ICICI Bank, AXIS Bank, HDFC Bank and State Bank of India, the CPIO/RBI denied it under Section 8(1) (a) and 8 (1) (b) of the RTI Act on the ground that disclosure was not in economic interest[15].
Girish Mittal Vs. Parvati V. Sundaram & Anr[16]:
Due to aforesaid stance of RBI, contempt petitions were filed against it in Supreme Court. While deciding them, Supreme Court in its recent decision of Girish Mittal dated 26.4.2019, came to the conclusion that RBI committed contempt of the Court by exempting disclosure of material that was directed to be given by it and that RBI is duty bound to furnish all information relating to inspection reports and other material except that which was specified in para 77[17] of the Jayanti Lal Mistry judgment.
Present position:
Subsequent to these two division bench judgments of Supreme Court viz., (i) RBI Vs. Jayanti Lal Mistry and (ii) Girish Mittal Vs. Parvati V Sundaram, it is now firmly laid down that the information collected by RBI from the banking companies/financial institutions, whether public or private, under various Statutes are not held by it in a fiduciary relationship and such information is not exempted under Section 8(1) (e) of the RTI Act. The only exemption that may become applicable to such information could be that of Section 8(1) (a), on the ground that the information being of national economic interest, its disclosure could harm the national economy, particularly if released prematurely. Lower level economic and financial information, like contracts and departmental budgets cannot be withheld by it.
RBI has modified its Disclosure Policy:
It has been reported that RBI has amended its Disclosure Policy and has deleted Sections 8(1) (a) and 8(1) (d) from it.
It is further reported that it will release the updated version of its Disclosure Policy after the Lok Sabha election results of 2019[18].
RBI has disclosed list of defaulters:
A news item has reported that in response to a RTI request, the RBI has released a list of 30 major wilful defaulters[19].
RBI to not to disclose bank reports till further orders:
It has been reported in a recent news item that a Supreme Court division bench has ordered that “Inspection reports, risk assessment reports, annual financial inspection reports of the banks including State Bank of India shall not be released by the Reserve Bank of India until further orders” [20]
The banks have thus obtained an interim stay from Supreme Court on the disclosure of bank reports under the RTI Act.
[1] Section 45 L of the Reserve Bank of India, Act, 1934
[2] information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;
[3] Sh. Ravin Ranchchodlal Patel Vs. RBI, Decision No.241/IC(A)/2006 F. No.CIC/MA/A/2006/00604 dated 6.9.2006
[4] 10. (1) Where a request for access to information is rejected on the ground that it is in relation to information which is exempt from disclosure, then, notwithstanding anything contained in this Act, access may be provided to that part of the record which does not contain any information which is exempt from disclosure under this Act and which can reasonably be severed from any part that contains exempt information.
[5] RBI v. Central Government Industrial Tribunal, (1959) ILLJ 539 P H dated 07/05/1958.
[6] Shri Ravin Ranchchodlal Patel, Shri Madhav Balwant Karmarkar Vs. RBI, Adjunct to Decision No. 241 and 243/IC(A)/2006, Appeal Nos.CIC/MA/A/2006/00406 & 00150 dated 7.12.2006
[7] (a) information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence;
[8]Mr. Jayantilal N. Mistry Vs. CPIO & Chief General Manager, RBI, Decision No. CIC/SM/A/2011/001487/SG/15434, Appeal No. CIC/SM/A/2011/001487/SG dated 1.11.2011
[9] Mr. Sanjay Sitaram Kurhade Vs. NABARD, Decision No. CIC/SG/A/2011/002405/16514, Appeal No. CIC/SG/A/2011/002405 dated 21.12.2011
[10] Mr. Raja M. Shanmugam Vs. CPIO, Reserve Bank of India, Decision No. CIC/SG/A/2011/001966/16167, Appeal No. CIC/SG/A/2011/001966 dated 7.12.2011
[11] Mr. A. Venugopal Vs. PIO, Reserve Bank of India, Decision No. CIC/SG/A/2011/002011/15404, Appeal No. CIC/SG/A/2011/002011 dated 31.10.2011
[12] 8(1) (h) information which would impede the process of investigation or apprehension or prosecution of offenders;
[13] (2) Notwithstanding anything in the Official Secrets Act, 1923 nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests.
[14] Reserve Bank of India Vs. Jayantilal N. Mistry, Transferred Case (Civil) No.91 of 2015 with Transferred Case (Civil) Nos.92,93,94,95,96,97,98,99,100,101 of 2015 dated 16.12.2015.
[15] Source: Girish Mittal Vs. Parvati V. Sundaram & Anr, Contempt Petition (C) No. 928 of 2016 in Transfer Case (C) No.95 of 2015 with Contempt Petition (C) No. 412 of 2016 in Transfer Case (C) No.96 of 2015 and Contempt Petition (C) No. 59 of 2017 in Transfer Case (C) No.95 of 2015 dated 26.4.2019.
[16] Girish Mittal Vs. Parvati V. Sundaram & Anr, Contempt Petition (C) No. 928 of 2016 in Transfer Case (C) No.95 of 2015 with Contempt Petition (C) No. 412 of 2016 in Transfer Case (C) No.96 of 2015 and Contempt Petition (C) No. 59 of 2017 in Transfer Case (C) No.95 of 2015 dated 26.4.2019
[17] In para 77 of the Reserve Bank of India Vs. Jayantilal N. Mistry judgment, Supreme Court dwelt on National Economic Interest.
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