RBI Directed To Disclose Information under Right to Information Act
The Supreme Court, in a landmark decision (Reserve Bank of India vs. Jayantilal Mistry) ruled that the RBI does not place itself in a fiduciary relationship with the financial institutions because, the reports of the inspections, statements of the bank and other information related to the banks’ business do not fall under the purview of the term confidence or trust. Whilst delivering the judgment for the bench, Justice M.Y. Eqbal, explaining the nature of functions of the banking sector regulator, said: “the RBI is supposed to uphold public interest and not the interest of individual banks. The RBI is clearly not in any fiduciary relationship with any bank. 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 RBI has a statutory duty to uphold the interest of the public at large, the depositors, the country’s economy and the banking sector. Thus, RBI ought to act with transparency and not hide information that might embarrass individual banks”.
Contentions by The RBI: RBI declined to disclose the information such as unpaid loans, top defaulters of the public sector banks, fines imposed by it on other banks etc., on the ground of being exempted under Section 8(1)(a), (d) and (e) of the RT I Act. The refusal to reply to the RT I queries was based on the premise of protecting economic interest, commercial confidence, and fiduciary relationship of RBI with other banks. RBI further contended that RT I Act was a general law and it could not override the confidentiality provisions under the specific legislations such as Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934 and the Credit Information Companies (Regulation) Act, 2005.
Court’s Findings: The Apex Court rejected the arguments made by the RBI and upheld the order of the CIC. It observed that RBI does not place itself in fiduciary relationship with other banks as information received from other financial institutions is not received under pretext of trust or confidence but under the ambit of RBI’s statutory duty to oversee the functioning of the banks and the country’s banking sector. Therefore, RBI is duty bound to comply with the provisions of the RT I Act and disclose the information sought in the instant case.
The RBI’s contention that disclosure of information would prejudicially affect the economic interest of the State and may lead to a crisis of financial stability if information sought is sensitive, was also rejected by the Court as being baseless and it was held that the disclosure in question would serve public interest.
The Court further observed that the right to information regarding the functioning of public institutions is a fundamental right enshrined in Article 19 of the Constitution, and the RT I Act being a later legislation aimed to bring transparency, overrides all earlier laws and practices except in case of specific exemptions enumerated u/s. 8 of the RT I Act.
Publicised as a landmark win, this judgement has been welcomed by the RT I activists. The implications of this judgement may indeed be far reaching, paving the way for greater accountability and transparency in the financial market.
NOTE:
1 Section 8 of the RTI Act mentions “exemption from disclosure of information.—
(1) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen,—
(a) information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence;
(d) information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;
(e) Information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information.”
