SC: RBI must disclose info
NEW DELHI: Striking a blow for financial transparency in the banking system, the Supreme Court on Wednesday revived its 2015 judgment making it necessary for the Reserve Bank of India (RBI) to disclose financial information regarding private and public banks under the Right To Information (RTI) Act.
The court dismissed a joint plea by the Central government and 10 banks seeking a recall of the 2015 judgment, consequently negating its interim order that stayed the release of the inspection reports of banks.
A bench of justices L Nageswara Rao and Vineet Saran held that the applications for recall were not maintainable and were an attempt to seek reconsideration of the 2015 judgment, which broke new grounds by opening up under the purview of the sunshine law, information relating to Non-Performing Assets (NPAs) or bad loans, losses from trading operations, even show-cause notices and fines imposed by RBI. “A close scrutiny of the applications for recall makes it clear that in substance, the applicants are seeking a review of the judgment in Jayantilal N Mistry (2015 judgment). Therefore, we are of the considered opinion that these applications are not maintainable. All the miscellaneous applications are dismissed,” held the SC. It noted that the banks did not make any attempt to present their version when the main case was heard.
The pleas for recall were filed by the Union government, State Bank of India, Punjab National Bank, HDFC Bank, Bank of India, Canara Bank, Bank of Baroda, Uco Bank, Indian Bank, Kotak Mahindra and AU Small Finance Bank.
Through its landmark verdict in 2015, the SC dismissed objections that RBI held financial information about the banks in a fiduciary capacity while making it clear that the banking regulator must not hide information that might embarrass the individual banks.
Subsequently, RBI came out with disclosure policies in 2016 and 2019 that sought to dilute the impact of the court verdict. But after the SC initiated contempt proceedings, the regulator rolled back the 2019 policy.
Six months later, HDFC Bank and SBI filed pleas for recall of the 2015 order and a different bench issued an interim order, saying: “Inspection Reports/Risk Assessment Reports/Annual Financial Inspection Reports of the Banks including State Bank of India shall not be released by the Reserve Bank of India until further orders.” After this, more banks queued up seeking relief.
The banks alleged violation of natural justice, and said they were not heard when the 2015 judgment made it mandatory for them to furnish crucial financial information under the RTI Act.