On a high horse

SC ultimatum on RTI info exposes RBI's overconfidence

The Supreme Court on April 26 issued an order that must have been a severe setback for the Reserve Bank of India. The apex court declared that the banking regulator was in contempt of court for failing to comply with a 2015 order directing it to make information regarding its annual inspection reports (AIRs) of banks available under the Right to Information Act. The court said the RBI had a statutory duty to uphold the interests of the public, depositors, the country’s economy and the banking sector, and that it should act with transparency and not hide information that might embarrass individual banks. The court gave the RBI one last chance to provide the information, and to withdraw the disclosure policy that governed the AIR, which the court also felt was in contravention of the RTI Act. The RBI felt that its own governing legislation, the RBI Act, specified that it must not share information on banks’ transactions widely; but the court held the RTI Act had a wider applicability, given that Section 22 of that latter law specified that it overrode any relevant provisions of previous legislation.

There are two lessons that need to be learnt from this unfortunate experience. Clearly the RBI must examine its legal strategy again. There were obviously serious lacunae in how it understood the legal framework to apply. The RTI Act contains specific exemptions for information related to commercial advantage or that pertains to a fiduciary relationship. It is unclear why the RBI has not relied on these exemptions, or why it has not been able to persuade the court that they apply to a confidential bank inspection report. It can also of course redact the portions that most directly relate to commercial transactions or fiduciary responsibilities and release the rest of the AIR. There appears to have been a certain overconfidence in the RBI with regard to how the RBI Act protects it from the branches of government. The central bank should look again at the source of this confidence — not just with respect to the judiciary but also the other branches. As it stands, the RBI should clearly have demonstrated greater agility in its arguments before the Supreme Court.

The case has anyway been going on for quite some time, and the RBI had enough time to discuss the issue with the government and convince it to amend the laws as necessary to keep the AIRs private, notwithstanding the RTI Act. This would have meant that there would be no reason for the Supreme Court to intervene. Unfortunately, there is a certain inflexibility about amending the laws even in response to emerging circumstances that causes situations like this to continue to arise. Now that the apex court has left the RBI with no option, the regulator must be more transparent in its disclosures. After all, it has been relentless in stressing the need for greater accountability from banks. The banking regulator was ticked off by the Chief Information Commissioner for failing to uphold the interest of the public and not fulfilling its statutory duty, by privileging individual banks’ interests over its obligation to ensure transparency. It’s time the RBI listened.