Category: Banking & Finance

The Supreme Court will consider in July petitions filed by various banks, including SBI and HDFC Bank, seeking a direction to RBI to exempt information related to their customers, trade secrets, risk ratings, any unpublished price sensitive information from the Right to Information Act. A Bench led by Justice L Nageswara Rao posted the matter for hearing in July first week.

The SC had last month revived its 2015 judgment making it necessary for RBI to disclose financial information related to private and public banks under the RTI Act. It had dismissed a joint plea by the Central government and 10 banks seeking a recall of the judgment in Jayantilal N Mistry (2015) that mandated RBI to disclose inspection reports of banks as well as details of willful defaulters on the grounds that the central bank had no fiduciary relationship with the banks.

In another attempt to wriggle out of the transparency law, the banks in their separate petition said that they being privy to sensitive information like personal details of its account holders, prospective loans and other financial transactions are required to keep such info confidential and maintain privacy as directed by the SC in the Justice KS Puttasamy vs UoI (Aadhaar judgment), which recognises the fact that right to privacy is a sacrosanct facet of fundamental rights.

Public disclosure of information pertaining to commercial confidence, business strategies, internal system, risk management, gas, etc., would not serve any larger public interest, but would adversely affect the competitive position of banks in a highly competitive private banking sector in our country, they told the top court.

Besides, SBI, four private banks – HDFC Bank, Axis Bank, ICICI Bank and Yes Bank – in their joint petition said that RBI in its role as banker to the government and banking regulator receives and holds a lot of sensitive information, the disclosure of which may not be in the interest of the nation or serve public interest. RBI also sometimes is privy to personal information of customers and the disclsoure of which would not only compromise the privacy of the concerned individuals but may also in some extreme cases endanger their life/security.

HDFC further said that the apex court in earlier judgments had clearly held that even if public interest is considered while determining whether certain information has to be disclosed or not, such determination has to be on case to case basis, backed with reasons in writing.

Terming disclosure of inspection reports as invasion of privacy of banks, their customers and employees, the petition led by HDFC Bank further told the SC that the RTI Act does not apply to private entities like them as they are not public authorities under the Act and therefore, information pertaining to such banks/FIs and their customers and employees cannot be sought/provided under the RTI Act, let alone confidential/sensitive information of such banks/FIs.

While RBI is required to follow the provisions of the RTI Act with regard to third party information and is bound to seek “submissions/representation” from the banks, the banks may require the consent of the individual account holders before any such disclosure, the petition stated, adding that access to technical, personal and highly confidential information pertaining to banks and its customers would not only unfavourably impact and undermine investors’ confidence in banks, but shall also have an impact on the economy at a macro level.