Direction to make public the annual inspection reports of banks was given by Information Commissioner Shailesh Gandhi while he overruled the objections given by country’s central bank saying that such reports are confidential.
Harm competitive edge
The country’s central bank had argued that the inspection carried out by the Reserve Bank often brings out the weaknesses in the financial aspect, management and systems of the inspected entity, therefore making these reports public might adversly affect the economic interests of the State and harm banks’ competitive position.
“The disclosure may impact the banking sector on the whole. 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.”
“This has serious implication on financial stability which rests on public confidence in banks and financial institution, besides harming their competitiveness,” the RBI submitted before the transparency panel. RBI also cited a previous order of CIC’s Full Bench, which said that the Bank was the best body to decided whether disclosure would affect economic interests of the State.
Transparency panel
Transparency panel rejected this argument and said that under RTI Act it is the Commission, which has to take a decision on the disclosure of information.
While hearing the RTI plea of Subhash Chandra Agrawal, who had sought the information, Gandhi said: “This appears to go against the basic tenets of democracy and transparency...Any constraint on the fundamental rights of citizens has to be done with great care even by Parliament.”
He further commented that “citizens have a right to know about the functioning and working of banking companies including any regulatory lapses. If there are irregularities in the functioning of institutions/ banking companies citizens certainly have a right to know about the same. A larger public interest would be served by disclosing this information under Section 8(2) of the RTI Act.”