RBI likely to withdraw non-disclosure policy under RTI

After being rapped by the Supreme Court, the Reserve Bank of India (RBI) is likely to withdraw its 2016 policy of non-disclosure of information on big loan defaulters under the Right to Information (RTI) Act.

The move will allow the central bank to disclose the annualinspection reports of the banks and the list of wilful defaulters under the RTIAct.

   

The Supreme Court on Friday ruled that the RBI was dutybound to disclose information related to wilful defaulters.

The banking regulator has not officially responded to the SCorder so far. Sources said the RBI would discuss the SC order to decide thenext course of action on disclosure of information under the RTI Act. An emailsent to the apex bank did not elicit any response.

The RBI also did not reveal whether it would straightawayshare the information sought by the RTI applicants or will seek time to reviewthe SC order before acting upon it.

According to another source, considering that the SC hassaid it was giving the RBI “one last opportunity”, there is not muchthat RBI could do but abide by the order and withdraw its 2016 application onnon-disclosure policy for RTI query. Any laxity will invite contempt of courtproceedings against the central bank.

The apex court, while directing the RBI to withdraw itsnon-disclosure policy, warned that any future violation of the transparency lawwould be taken “seriously”.

The SC held that the RBI’s non-disclosure policy was inviolation of a top court order passed in 2015, which directed the central bankto disclose information under the provisions of the RTI Act.

Opinions were divided on whether internal assessment reportsshould be made public.

Former RBI Deputy Governor Rama Subramaniam Gandhi toldIANS: “It is a standard practice all over the world that bank supervisorskeep the inspection report confidential. Public disclosures can underminepublic confidence in the banks through uninformed and out of contextinterpretations.”

He also said that public disclosures will not help the banksrecover money from the defaulters.

However, proxy advisory and corporate governance firmInGovern said that the SC order was a war on non-performing assets (NPAs) andthat being shareholders of the public sector banks, people had the right toknow such information.

“It (the order to disclose information) may not helpthe banks, but it will definitely help the investors in the banks and thetaxpayers in general if they get to know about the wilful defaulters and whatexactly the RBI said in the inspection reports. It will surely help theshareholders track down the divergences made by many banks on NPAdislosures,” said Sriram Subramanyam, Managing Director at InGovern.

“Taxpayers are the shareholders in PSU banks and theyare paying for the wilful defaulters. So they have the right to know what isthe quantum of NPAs and who are the wilful defaulters. This should be seen as awar on NPAs,” he said.

This is for the second time in a month that the SC hasstruck down some of the key decisions of the RBI taken during its formerGovernor Urjit Patel’s tenure.

On April 2, the apex court declared RBI’s February 2018 NPAcircular as “ultra vires,” mandating insolvency proceedings.

In that order, the SC quashed the February 12, 2018 RBIcircular which gave the lender banks six months’ time to resolve their stressedassets or move under insolvency proceedings against defaulters in loans worthover Rs 2,000 crore.

With regard to the non-disclosure policy, the case was filedafter the petitioners were denied copies of inspection reports of ICICI Bank,Axis Bank, HDFC Bank and State Bank of India from April 2011 till December2015. They had sought the same under the RTI Act in December 2015. In Januarythis year, the court had issued a contempt notice to the RBI.

Earlier on Friday the Supreme Court directed the ReserveBank of India (RBI) to disclose information pertaining to its annual inspectionreport of banks under the Right to Information (RTI) Act unless they areexempted under law.

A bench headed by Justice L Nageswara Rao also directed thefederal bank to review its policy to disclose information relating to banksunder RTI, saying “it is duty bound under the law”.

The bench, which did not go ahead with contempt proceedingsagainst the RBI, made it clear that it was giving a last opportunity to it tocomply with  provisions of thetransparency law.

The bench said it would have taken a serious view to therefusal of RBI to part with information under RTI.

“Any further violation shall be viewed seriously,”the bench said.

In January this year, the top court had issued contemptnotice to RBI for not disclosing annual inspection report of banks under RTI.

Earlier, the apex court and the Central InformationCommission, both had held that the RBI cannot deny information to aninformation seeker under the transparency law unless the material is exemptedfrom disclosure under the law.

The RBI, in its defence, had said that it cannot discloseinformation as the annual inspection report of the bank contained”fiduciary” information as defined under the transparency law.

The bench was hearing a contempt petition filed by RTI activist S C Agrawal against the RBI.

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