The Supreme Court on Wednesday ruled that the Reserve Bank of India (RBI) is under the purview of the overarching RTI Act and hence bound to divulge business details of all banks including the financial regulator’s audit reports and list of defaulters.
The apex court also the asked the country’s regulator – which had been resisting attempts to open its books to public scrutiny -- to crack down on financial institutions indulging in “disreputable business practices”.
Rejecting a clutch of appeals by the RBI against various orders of the Central Information Commission (CIC), a bench headed by Justice MY Eqbal said the regulator was duty bound to comply with provisions of the RTI Act and disclose information sought by the people.
Coming down heavily on the RBI for protecting the interests of private banks, the court said facts revealed that banks were trying to cover up their underhand actions and, therefore, were even more liable to be subjected to public scrutiny.
“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,” the bench said.
It dismissed the RBI’s contention that it could not reveal the information such as the list of loan defaulters because it had a “fiduciary relationship” with the banks.
“This attitude of the RBI will only attract more suspicion and disbelief in them. RBI as a regulatory authority should work to make the banks accountable to their actions,” the bench said.
Former information commissioner Shailesh Gandhi described the court’s ruling as a “landmark judgment” and said: “…it places trust in the people of India as responsible and mature who must get information such as RBI audit reports, action taken against banks, list of defaulters, classification of banks, fines imposed on banks and so on. This will bring greater accountability in our financial system,”
Of the 10 decisions of the CIC challenged by the RBI in the SC, nine were given during his tenure as the CIC.
Terming “as baseless and misconceived” the RBI’s argument that the disclosure would hurt the economic interests of the country, the court added the information that RBI received from banks was not under the pretext of confidence or trust but was under its statutory duty to do so.