RBI should give up its contempt for RTI

The Reserve Bank of India (RBI) continued to resist the transparency and disclosure for more than a decade, it is inevitable now for respecting the RTI in its regulatory administration.

Any public body, for that matter, cannot hide their skeletons in opaque cupboards.

Apex court gave a final warning to the RBI to stop its habitual denial of information, which mandatorily should be disclosed under RTI provisions and RBI norms.

The Supreme Court in a recent Judgment (April 26, 2019 in Girish Mittal case) generously let RBI free from penalties for contempt of court but sufficiently warned to change its policy.

The banking regulatory RBI has a duty to secure public interest by checking the defects of banks to prevent financial scandals and corruption in public and private banks.

It has no scope for hiding under 'commercial confidence' as the law demands it to give more information to public in public interest.

Non-performing assets are the result of non-performing banks. RBI has to ensure people about proper performance of financial institutions.

Its anti-RTI attitude made the information seekers to run from pillar to post, which include filing 'application to PIO, first appeal in RBI, second appeal to CIC, High Courts and Supreme Court'.

Final order of apex court in 2015 in Jayantilal Misra case has rejected all its contentions. The transparency champions thought with this the fight for information was won and over.

Yet, the RBI continue to refuse the RTI applications with same defences and made the citizens to repeat entire cycle. Individual citizens must spend their money in countering litigation by RBI, which spends public money. It's atrocious.

Various applicants sought different kinds of information from the RBI. One Mr Kapoor asked for details of defaulters of loans including names of top 100 defaulters with details.

In an affidavit before Orissa High Court, the RBI said that market to market (MTM) losses because of currency derivatives was to the tune of more than Rs 32,000 crore.

Mr Raja M Shanmugam, President of Derivative Consumer's Forum, sought under the RTI to know the bank-wise breakup of the MTM losses.

RBI argued that disclosure of some of it could "adversely affect the public interest and compromise financial sector stability". It also contended that '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'.

These are just heavy statements as excuses without any basis. They utterly failed to convince the CIC and the Supreme Court. How can hiding the names of defaulters usher in economic growth?

Mr Jayantilal Misry wanted an RBI investigation and audit report of Makarpur Industrial Estate Cooperative Bank Ltd of Gujarat along with action taken report.

Some other applicants sought similar reports of other banks. Mr Subhash Chandra Agrawal wanted to know file notings of the RBI on imposing fines on some other banks.

Patil sought copies of complaints to the RBI against illegal working of some banks and violations of Standing Orders of the RBI etc. The RBI resisted the disclosure despite the CIC directions to provide the same.

All the cases landed in the Supreme Court, which upheld the CIC orders of disclosure mostly passed by the then CIC Shailesh Gandhi, in 2015, a landmark victory for transparency.

The RBI announced a disclosure policy saying it cannot provide information on 26 areas, including the classes of information directed by the Supreme Court to be given.

The RBI also went on refusing to give inspection reports, defaulters list, penalty notes and audit reports etc, on the grounds which are rejected by the Supreme Court.

The RBI clearly propagated a double tongue policy – publicising the names of farmers who could not pay loan compelling them to end their lives, and guarding the names of the defaulters, despite the Supreme Court's clear instructions.

Under these circumstances, this author as the CIC, had to issue a show cause notice to the RBI Governor considering him as 'deemed PIO", to impose penalty for this kind of defiance.

Finally, the SC concluded, again, on 26th April that RBI was bound to disclose and directed it to withdraw its disclosure (aka non-disclosure) policy which is in breach of SC judgment in 2015.

"Any further violation shall be viewed seriously," warned the bench comprising Justices L Nageswara Rao and M R Shah, saying that the Central bank could face contempt proceedings if it failed to furnish the information.

The court had held that RBI is accountable to the public and cannot withhold information under the defence of "trust" with the financial institutions.

Former Deputy Governor of the RBI, R Gandhi saw problems in disclosing bank inspection reports, which are comprehensive assessment of bank as an entity and if something is taken out of context that could be a 'danger'.

Currently, the annual inspection is based on a Risk-Based Supervision method which focuses on "evaluating both present and future risks, identifying incipient problems and facilitates prompt intervention/early corrective action".

It covers financial position, functioning of board and various links of the bank, details of assets and liabilities, treasury management, asset liability management, liquidity operations, para banking activities, etc.

But the RBI must see the overriding public interest in giving information rather than stone walling the demands. It should break colonial mental blocks of no access for better financial governance of the banking industry.

The 'rule of secrecy with disclosure as exception' exists no longer because it was reversed in 2005 to 'disclosure as a rule with exception of privilege'.

To keep secrets could be a royal privilege of British vintage era. The regulatory, being a 'State', has no more immunities, rather it would be liable for losses caused by its negligence, if any. 'King can do no wrong' days have gone, and the RBI is not a king.

The State and State instrumentalities like the RBI should not abdicate their legitimate duties and drag the citizens to the courts fighting for their rights.

These bodies together became the biggest litigants besides being sole cause of litigation in around sixty per cent of 3 crore cases pending.

While dealing with specific request for information of a bank's inspection report, the RTI Act gives an opportunity to deny, after due examination of needs to protect the interest of other bank as per Section 8.

Access law provided to redact non-disclosable information and provide the rest. The RBI cannot refuse disclosure en bloc.

It cannot ignore huge public interest in transparency which could have prevented several bank scandals involving private and public banks and prevented fleeing of thousands of defaulters causing huge loss to banks.

What is of great concern is, after the SC Division Bench reserved orders in contempt case, the RBI has the audacity to post its latest 'disclosure policy' on April 12, directing its departments to 'withhold information' that was expressly ordered to be shared by the SC order in 2015.

The Reserve Bank's intransigence and repeated failure to honour the SC's order undermines the very rule of law it seeks to enforce as a regulator.

Such a policy also does not augment well for the nation in terms of economic interests. It also amounts to protecting defaulters and financial scamsters.

Despite noticing wilful defiance of the RBI, the apex court was very kind to it in contempt cases, but if the later does not withdraw this anti-transparency policy again, it might face the ire of people and courts.

The RBI should explain why it wants to screen big loan defaulters and banks that breach norms?

(The writer is former Central Information Commissioner and Professor of Law, at Bennett University, Greater Noida)