Dear RBI, do not commit contempt of RTI again

For the Reserve Bank of India, which resisted the change for more than a decade, it is inevitable now to incorporate transparency in its regulatory administration. No public body, for that matter, can hide its skeletons in opaque cupboards. The RBI is, unfortunately, yet to come to terms with transparency. The banking regulator should understand it has no scope for hiding under ‘commercial confidence’ as the law demands it to give more information to the public in their interest.

The Supreme Court recently gave the RBI a final warning to stop its habitual denial of information that should be mandatorily disclosed under RTI provisions and RBI norms. The SC in a recent judgement (April 26, 2019, in the Girish Mittal case) generously let off the RBI without penalties for contempt of court but warned it sufficiently strongly to change its policy. The RBI must take Right to Information (RTI) within its fold. Any further resistance to transparency is illegal, unconstitutional and amounts to contempt of the Supreme Court.

The RBI made the information-seekers run from pillar to post, filing application first to its public information officer (PIO), then a first appeal, a second appeal to the Central Information Commission (CIC), then approach the High Court and the Supreme Court. The apex court rejected all defences and contentions of RBI. The transparency champions had thought that with the 2015 order in the Jayantilal Misra case, the fight for information was won and over. But the RBI dragged the applicants again to the HC and SC, remained reluctant until four contempt of court complaints were moved against its defiance of SC directions.

Applicant Kapoor asked for details of defaulters of loans, including the names of the top 100 defaulters with details. In an affidavit before Orissa High Court, RBI said that mark-to-market (MTM) losses of banks because of currency derivatives was more than Rs 32,000 crore. Raja Shanmugam, president of the Derivative Consumers’ Forum sought under 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 — excuses without any basis. They utterly failed to convince the CIC and the Supreme Court. How can hiding the names of loan defaulters help the economy?

Jayantilal Mistry wanted the RBI’s investigation and audit report of Makarpur Industrial Estate Cooperative Bank Ltd of Gujarat, along with the action taken report. Some other applicants sought similar reports of other banks. Subhash Chandra Agrawal wanted to know file notings of RBI on imposing fines on some other banks. Patil sought copies of complaints to RBI against illegal working of some banks and violations of Standing Orders of RBI, etc.

The SC has upheld the 2015 CIC orders of disclosure mostly passed by the then Central Information Commissioner, Shailesh Gandhi. The RBI announced a disclosure policy, saying it cannot provide information on 26 areas, despite the SC direction. It kept refusing to share inspection reports, defaulters list, penalty notes and audit reports, etc, on the same ‘invalidated’ grounds.

While publicising the names of farmers who could not repay loans, compelling them to end their lives, the RBI is guarding the names of big defaulters of high-value loans. Under these circumstances this author as CIC had to issue a ‘show cause’ notice to the RBI Governor, considering him as ‘deemed PIO”.

The SC reiterated that the RBI was bound to disclose the information and directed it to withdraw its disclosure (or rather, non-disclosure) policy, which is in breach of the 2015 SC judgement. “Any further violation shall be viewed seriously,” warned Justices L Nageswara Rao and M R Shah — either furnish the information or face contempt penalty, the central bank was told.

The RBI is accountable to the public and cannot withhold information under the defence of “trust” with the financial institutions. Former deputy governor of RBI R Gandhi saw problems in disclosing bank inspection reports, which are comprehensive assessments of a bank as an entity, fearing that if something is taken out of context that could be a ‘danger’. But the RBI must see the overriding public interest in giving information, rather than stonewalling the demands.

The State and State instrumentalities like RBI should not abdicate their legitimate duties and drag citizens to court to fight for their rights. These bodies together are the biggest litigants – the sole cause of litigation in 60% of over three crore pending cases in the courts.

On banks’ inspection reports, the RTI Act gives the RBI an opportunity to deny information to safeguard the interests of other banks, unless overriding public interest is found in disclosure. The RBI must access law provided to redact non-disclosable information and provide the rest, it cannot refuse disclosure en bloc. It cannot ignore the huge public interest in transparency, which could have prevented several bank scandals involving private and public banks and prevented the fleeing of defaulters, causing huge losses to banks.

Unfortunately, the RBI, even after the SC reserved orders in the contempt case, posted its latest ‘disclosure policy’ on April 12, continuing to withhold information that the SC ordered released. Its repeated failures to honour the SC order undermines the very rule of law it seeks to enforce as a regulator itself. This does not augur well for national economic interests.

Despite noticing the wilful defiance of the RBI, the apex court was kind to it. If the RBI does not withdraw its anti-transparency policy, it will face the ire of the people and courts. The RBI should explain why it wants to shield big loan defaulters and banks that breach norms. Should it be protecting defaulters and financial scamsters?

(The writer is a former Central Information Commissioner)