The Supreme Court is dealing with a tricky issue in asking the Reserve Bank of India (RBI) to disclose information under the Right to Information (RTI) Act regarding inspection reports and defaulters’ list.

In 2010, a petition was filed under RTI Act seeking information on losses on foreign derivative contracts. The RBI denied supplying of the information. The petitioner moved the Supreme Court against the RBI. In 2015, the Supreme Court ruled that the RBI cannot withhold information citing fiduciary relation with banks as the reason.

 When another RTI petition was filed seeking information on the inspection report on ICICI, Axis, HDFC and SBI, this request was also denied. In 2016, the RBI promulgated a new disclosure policy to the effect that it is not bound to reveal the information.

In 2019, the Supreme Court ruled that not revealing information would amount to serious contempt of court. The court recently reprimanded the RBI for refusing to disclose information pertaining to annual inspection report on banks under the RTI Act and warned that any further attempts by the banking sector regulator to muzzle such information “shall be viewed seriously by the court”.

Though the court held the RBI in contempt of court, it gave the regulator “one last opportunity” to withdraw the disclosure policy relating to the annual inspection report on banks. The RBI, the court held, was “duty-bound under the law” to provide such information, which was otherwise exempted under law.

“Though we could have taken a serious view of the respondents continuing to violate the directions issued by this court, we give them a last opportunity to withdraw the disclosure policy insofar as it contains exemptions which are contrary to the directions issued by this court,” a two-judge Bench of Justice L Nageswara Rao and Justice MR Shah said.

 In April, the court had warned the RBI of contempt proceedings for failing to disclose information and given it one week’s time to comply with the directions or “be ready to face the consequences”. The court had in January 2019 issued a notice to the RBI on a contempt petition alleging the RBI had not provided information about the inspections conducted on some banks said to be involved in irregularities inside the Sahara group.

The petitioner alleged that the RBI had denied information regarding the inspection report on ICICI Bank, Axis Bank, HDFC Bank, and SBI despite clear orders of the top court. The RBI had refused to provide information to the petitioner, claiming “fiduciary r4elationship” between itself and the banks in question. Such information, the regulator had then said, was exempted from being revealed under Section 8(1)(d) and (e) of the RTI Act. Section 8 allows the government to withhold from public some information in order to “guard national security, sovereignty, national economic interest, and relations with foreign states”.

The information to the petitioners was denied by the RBI despite orders from the Central Information Commissioner (CIC). However in January 2015, the then Justices MY Eqbal and C Nagappan, while rejecting this argument by the RBI, had held that the banking sector regulator was supposed to “uphold public interest and not the interest of banks”. The RBI, they had said, was thus “clearly not in any fiduciary relationship with any bank”.

“The 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,” the court said. This behaviour of the banking sector regulator in denying information under RTI would “only attract more suspicion and disbelief in them”, the judges had said.

One of the petitioners who had sought the information from the RBI under RTI had claimed that there was a loss of nearly Rs 32,000 crore to the nation due to foreign derivative contract cases.

The petitioner had sought a bank-wise breakup of the mark-to-market losses due to these contracts. Another petitioner, who had approached the court after being denied information by the RBI, had sought to know the details of show-cause notices and fines imposed on various banks.  On June 30, 2016, the RBI uploaded a disclosure policy under which it claimed, “Public Information Officers (PIOs) were directed not to disclose virtually all kinds of information.”

One of the exemptions under the new policy was related to the department of banking regulation and said that “information relating to specific supervisory issues emanating from inspection or scrutiny reports received from other supervisory departments” were exempted from disclosure.

The RBI again came out with a new disclosure policy on April 12, 2019 that mentions that information available to a person in his fiduciary relationship can be withheld by the RBI.

The RBI said, “Each application received under the RTI Act would be examined in light of the provisions of the Act and any decision with respect to non-disclosure by the bank will be supported by citing the relevant exemption provisions of the RTI Act.” People familiar with the working of the banking sector regulator, however, say that since the court order is now in effect and is the stronger of the two, it will be followed.

“The respondents (RBI) are duty-bound to furnish all information relating to inspection reports,” the recent judgment says. The information to be disclosed is from the Annual Financial Inspection (AFI) reports, which the RBI prepares as supervisor of banks.

These reports focus on statutorily mandated areas of solvency, liquidity and operational health of the bank. It covers areas like capital adequacy, asset quality, management, earning, liquidity and system and control.

Fiduciary relationship and right to privacy have yielded to Right to Information. This is a historic trend in recent jurisprudence relating to RTI as a fundamental right. Days ahead shall further condition and fine-tune the contours of disclosure and non-disclosure. The demands of public interest are tending to be the overriding consideration for necessitating a disclosure.

Matters of public interest ought to be disclosed and available eventuality in public domain. The Supreme Court very recently permitted the disclosures made in a newspaper to be taken into consideration in the context of adjudication of a PIL.

This is a long travel from the days of Official Secrets Act. In the case of SP Gupta more than 35 years ago, the Supreme Court indicated the requirement of an “open society”.  The gradual move towards the same is now being fought out through different litigations. But the eternal problem has remained as it relates to the competing interest of confidentiality (and non-disclosure) and disclosure. The gradual trend is towards disclosure if there is any cause of public interest.

Normally, banking relationships are treated as confidential. After the recent pronouncement of the Supreme Court, right to privacy has its role to play in this field. The RTI Act is making significant advancements in reducing the veil of secrecy. In the days when penetration into private life is tending to increase, there has to be caution and care in being very discerning.

 The judiciary has the onerous task of calibrating the social engineering with due consideration of the pros and cons. The present trend will march forward with a thrust in the coming years. There had been a beginning; now, there is a turning point; and there will be further march towards democratisation of our society on a more even balance in the march towards an “open society”.

(The writer, a Senior Advocate, is a former All India Service officer, a former diplomat, a former editor, a former President of Orissa High Court Bar Association and a former Advocate General of Odisha jayantdas@hotmail.com)