New Delhi: Stopping short of initiating contempt of court proceedings against the Reserve Bank of India (RBI), the Supreme Court on Friday gave one “last opportunity” to the Central bank to disclose its annual inspection reports of private banks and financial institutions along with the list of loan defaulters and non-performing assets (NPAs) under the Right to Information (RTI) Act.
A bench headed by Justice L. Nageswara Rao also directed the RBI bank to review its policy to disclose information relating to banks under RTI, saying, “It is duty-bound under the law”.
“We could have taken a serious view of the continued violation but giving a last opportunity to the RBI to withdraw (disclosure) policy,” the court said, stopping short of initiating contempt proceedings against the RBI while hearing an RTI applicant’s plea against denial of information despite the top court’s direction. “Any further violation shall be viewed seriously,” said the bench, which also included Justice M.R. Shah.
The top court rejected the RBI’s stand that it is not bound to disclose the details and held that by its failure to disclose the information the RBI committed contempt of court for violating the 2015 judgment in which it had said that 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. The RBI has no legal duty to maximise the benefit of any public sector or private sector bank. 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,” the court had said.
The top court’s latest decision comes after its contempt notice to the RBI in January as it failed to disclose information related to the annual inspection report of banks under the RTI.
While hearing the contempt petition filed by RTI activist S.C. Agrawal, the Supreme Court said the RBI cannot deny information under the transparency law unless the material is exempted from disclosure under the law.
The Central Information Commission (CIC) had also issued a similar direction over the RBI withholding information related to banks.
The bench also rejected the RBI’s defence that information related to banks cannot be shared as it contains “fiduciary” information.
Mr Agrawal filed the contempt petition seeking action against RBI for its failure to disclose details of Rs 32,000 crore loss in foreign derivative contracts and other details relating to loan defaulters.
Justice Rao said that orders were reserved on the contempt application on April 2 after which the RBI’s new disclosure policy was uploaded on the website on April 14.
“The petitioner is right in submitting that the new policy which replaced the disclosure policy dated November 30, 2016, directed various departments not to disclose information that was directed to be given by the judgment of this court on December 16, 2015,” he said.
The bench said the RBI and other financial institutions have committed contempt of this court by exempting disclosure of material that was directed to be given by it.
The Supreme Court agreed that the economy could be harmed if information is prematurely released on matters of national economic interest, currency or exchange rates, interest rates, taxes, the regulation or supervision of banking, insurance and other financial institutions and proposals for expenditure or borrowing and foreign investments. However, lower-level economic and financial information like contracts and departmental budgets should not be withheld under this exemption, the court said.
This is the second time this month that the top court has hauled up the RBI. On April 2, the Supreme Court had declared the February 12, 2018, circular of the RBI unconstitutional, which was a big blow to the insolvency and bankruptcy law.
The circular had completely revamped the rules tackling NPAs. It came at a time when the banking sector’s profitability was taking a hit, bad loans had spiralled to a whopping Rs 10 lakh crore, and the PNB scam was beginning to unravel.
“In view of the enactment of the Insolvency and Bankruptcy Code, 2016 (IBC), it has been decided to substitute the existing guidelines with a harmonised and simplified generic framework for resolution of stressed assets,” read the circular.