RBI and RTI: Recent Supreme Court Judgement
On December 16, the Supreme Court of India said that RBI cannot reject the plea asking information regarding private and public banks under the Right to Information (RTI) Act.
While considering the several appeals filed by the RBI against various orders of the Central Information Commission (CIC) and High Courts asking the RBI to disclose the information sought by the individuals relating to banks, the court held that by citing the reasons of economic security and its fiduciary relationship with banks, the RBI cannot withhold the information.
The court said that it is the statutory duty of the RBI to uphold public interest, depositors’ interest and not the interest of the individual banks. Many financial institutions resorted to several unlawful activities and the RBI in association with them has been protecting them from public scrutiny.
As a regulatory authority, the RBI should make the banks more accountable to public for their actions. The argument that the disclosure of information would hurt economic interest of the country is misconceived. Citizens of the country have a right to know how the banking operations are running as it is the public money that the banks disburse.
The court said that neither the fundamental rights nor RTI have been provided in absolute terms. However, the court allowed low level information like contracts and departmental budgets to be withheld under the exemptions provided in the RTI Act.
Should the RBI be brought under the RTI Act?
The RTI law states that on the grounds of economic interest, access to information can be restricted. But the court says information is an empowering tool that could foster national interest.
One of the main reasons for the 2008 US subprime crisis was opaque functioning of the financial system that breeds malpractices. Why should the RBI protect big-ticket defaulters who are willingly not repaying? The balance sheets of Indian banks are piled up with non-performing assets and the reason for that is not necessarily poor judgement in assessing projects but also funding of unviable projects by bank officials. To save the public banks, the government frequently infuses public money. If the RBI frequently discloses the information about banks that breach rules, it would help the citizens to keep away from those institutions. Whenever there is a collapse of any private bank due to bad practices, it would hit small depositors the most. It is in the economic interest of the people that the RBI should make the banking operations more transparent and help the citizens to take informed decisions in their transactions with banks.