State Bank of India and
HDFC Bank have opposed the
Supreme Court order that had said the Reserve Bank of India can divulge inspection reports of commercial banks through Right To Information applications. The court has kept the hearing for Thursday. The
RBI had allowed making such reports public following a Supreme Court order in 2015. Then, it was agreed that the entire report would not be made public, but the relevant portions on bad debts, and borrowers etc.
However, even such information can disclose much information about the borrowers, which violates various client confidentiality clauses of banks, the lenders argue.
The SC verdict in April
In a major blow to banks, the Supreme Court in April this year had refused to recall its 2015 judgment, which had held that the RBI will have to provide information about the banks and financial institutions (FIs) regulated by it under the transparency law.
Several FIs and banks, including the Canara Bank, the Bank of Baroda, the UCO Bank and the Kotak Mahindra Bank had filed applications in the top court seeking a recall of the 2015 judgment in the Jayantilal N Mistry case, saying the verdict had far-reaching consequences and moreover, they were directly and substantially affected by it.
The banks had contended that the pleas for a recall of the judgment, instead of a review, is “maintainable” as there was a violation of the principles of natural justice in view of the fact that they were neither parties to the matter nor heard.
“A close scrutiny of the applications for a recall makes it clear that in substance, the applicants are seeking a review of the judgment in Jayantilal N Mistry. Therefore, we are of the considered opinion that these applications are not maintainable,” a bench of justices L Nageswara Rao and Vineet Saran said.
The order, written by Justice Rao, said in the instant case, the dispute relates to information to be provided by the Reserve Bank of India (RBI) under the Right to Information Act (RTI) and though the information pertained to banks, it was the decision of the RBI that was in challenge and decided by this court.
The RBI stance
The RBI in 2019 has declined to share details of banks inspection reports citing a section of the transparency law that exempts public authority from disclosing information that may prejudicially affect sovereignty, security or economic interests of the country.
Replying to an RTI query, the central bank also said furnishing the requested information will disproportionately divert the resources of the public authority.
The Reserve Bank of India (RBI) was asked to provide copies of all the annual financial inspection reports, concurrent audit or inspection reports carried out between 2007 and 2015 on foreign currency derivative contracts sold by the 19 banks that were earlier penalised by it.
“The requested information pertains to inspection reports of 19 banks for a period of eight years from April 1, 2007 to March 31, 2015. Therefore the total number of reports would be 152 (one report per bank for 19 banks for eight years i.e. 152).
“Furnishing the requested information will disproportionately divert the resources of the public authority,” the RBI said in reply to the RTI query filed by S Dhananjayan.