Bank Inspection Reports: 'Undecided' CIC Asks CPIO & FAA To Take Own Decision on Disclosing Information under RTI
Despite two explicit judgements by the Supreme Court, the central information commission (CIC) could not decide upon directing central public information officers (CPIOs) of the Reserve Bank of India (RBI) to furnish information on inspection reports of banks and financial institutions (FIs). In one paragraph, the division bench at CIC says the CPIO should decide on his own before providing information under the Right to Information (RTI) Act. In the next paragraph, however, the CIC says the public authority, if expedient, may wait for the outcome in two writ petitions (WP) filed in the Supreme Court. 
 
While setting aside orders passed by CPIO and first appellate authorities (FAAs), information commissioners Neeraj Kumar Gupta and Suresh Chandra, say, "The Commission also expects that the CPIO will take a view on various objections filed by the banks and financial institutions and submissions made by the applicant to reach the decision in favour or against redaction of various parts of the report on case to case basis."
 
"...any decision of redaction or disclosure of information, without waiting for decision in the WP Nos1159/2019 and 768/2021 and others tagged may cause irrevocable damage against right of privacy and protection of commercial interest. Hence, the respondent public authority if expedient may wait for the outcome in WP Nos1159/2019 and 768/2021 and others tagged or seek clarification from the Supreme Court and accordingly decide these RTI applications by following process as enumerated in the earlier paras by the Commission in the interest of principles of natural justice. While disclosing the information, they should be cautious in taking a considerate view balancing right to privacy, protection of national and commercial interest, on one hand, vis-à-vis larger public interest," the CIC says in its order passed on 5 May 2022.
 
Interestingly, in 2015, the Supreme Court had directed RBI to share the reports under RTI. However, the central bank went one step ahead and denied information citing one paragraph from the apex court's ruling. (Read: Bank Inspection Reports: RBI Intends To Share It under RTI but Is Delaying It Using the Rulebook)
 
On 28 April 2021, the apex court, on legal grounds, had refused to recall its now famous 2015 judgement in the Jayantilal N Mistry case, which had held that RBI will have to provide information about banks and financial institutions regulated by it under the transparency law. (Read: Supreme Court Rejects Banks' Appeal To Restrict RBI from Disclosing Defaulters' List, Inspection Report under RTI)
 
Both the writ petitions mentioned in the CIC order are admitted in the SC seeking guidance and direction on non-disclosure of certain type of information which are essentially part of RBI's annual inspection report (AIR) and risk assessment reports (RARs) of banks and financial institutions.
 
Mumbai-based RTI activist Girish Mittal had filed the RTI application on 1 May 2021 and sought information regarding AIR/RARs made by RBI after completing the inspection, 15 banks and financial institutions (FIs) for the past three years. He also asked for copies of show cause notices issued to any of the banks and response of these banks and FIs.
 
He sought copies of reports of HDFC Bank Ltd, RBL Bank, Yes Bank, Axis Bank, ICICI Bank, Bajaj Finance Ltd, State Bank of India (SBI), Bank of Baroda (BoB), Induslnd Bank, Kotak Mahindra Bank (KMB), HDFC Ltd, Infrastructure Leasing & Financial Services (IL&FS), IDFC Bank and Sahara India Financial Services or any entity of Sahara group registered with RBI. 
 
Intending to disclose the information, the CPIO of RBI issued notices under Section 11(1) and 11(3) to the banks and FIs. These banks and FIs filed apeal befor the FAA, which was dismissed. Some banks then filed second appeal before the CIC. 
 
These banks contended that the information sought as a whole is exempted from disclosure under Sections 8(1)(d) and 8(1)(j) of the RTI Act and that the CPIO and FAA have not passed any reasoned order settling their objections nor gave any opportunity of hearing to them. 
 
The CIC observed that it is already a settled position in Jayantilal Mistry's case that RBI is not fiduciary in relationship with the banks and financial instution irrespecitve of these being public or private entities. But, it says, "contents of those reports viz. names of depositors/ borrowers, their transaction and financial history, entrusted by the clients to their respective banks or financial institutions are interspersed in these reports and have to be examined in the light of para nos. 77 of the same judgment and various other judicial pronouncements protecting right to privacy and protection of commercial interests."
 
In the RBI vs Jayantilal N Mistry case, the Supreme Court had said, "In the instant case, the RBI does not place itself in a fiduciary relationship with the financial institutions (though, in word it puts itself to be in that position) because, the reports of the inspections, statements of the bank, information related to the business obtained by the RBI are not under the pretext of confidence or trust. In this case neither the RBI nor the banks act in the interest of each other. By attaching an additional 'fiduciary' label to the statutory duty, the regulatory authorities have intentionally or unintentionally created an in terrorem (serving or intended to threaten or intimidate) effect."
 
"Furthermore, the RTI Act under section 2(f) clearly provides that the inspection reports, documents etc. fall under the purview of 'Information', which is obtained by the public authority (RBI) from a private body," the apex court observed. 
 
In the judgement, the SC had conclusively stated that "As in this case, the RBI is liable to provide information regarding the inspection report and other documents to the general public."
 
In reply to Mr Mittal's RTI application, the CPIO of RBI has cited para 77 of the same judgement. Para 77 of the Supreme Court judgement, however, talks about information sought by SS Vohra based on a written statement on 24 July 2009 made by the then finance minister in Parliament and an order issued by the central information commissioner. 
 
"This is a matter of concern since it involves the violation of policy guidelines initiated by the RBI and affects the public at large. Transparency cannot be brought overnight in any system and one can hope to witness accountability in a system only when its end users are well- educated, well-informed, and well-aware. If the customers of commercial banks remain oblivious to the violations of RBI guidelines and standards which such banks regularly commit, then eventually the whole financial system of the country would be at a monumental loss. This can only be prevented by suo motu (relating to an action taken by a court of its own accord) disclosure of such information as the penalty orders are already in the public domain." 
 
This is what para 77 of Supreme Court judgement says in the Jayantilal Mistry case.
 
"The Commission is of the view that it is not a simple set of information as inspection and audit report consists of data about client, borrowers and institution beside, its analysis, judgment and observations on the analysis on the data provided by the banks on its functioning, regulatory compliance, deficiencies and strengths, suggestions for course of correction, and penal action as per provisions of the law and may be much more which the Commission may not be in a position appreciate in toto at this stage," it added.
 
Outlining deficiency in the conduct of the CPIO and FAA, the CIC also directed them to take  due care by according opportunity of personal hearing and making reasoned order with reference to the objections in the hands of the CPIO and later in the hands of FAA, if any appeal is preferred. 
 
It further says that the two writ petitions also seek the protection of interim communication between the regulator and the regulated entity in the finalisation of these reports or otherwise. 
 
"It is obvious that decision in these writ petitions will provide clarity and guidance to the public authority on redaction or non-disclosure of a set of information inspite of being part of these reports which are open to disclosure. At this stage, any decision by the public authority will amount to pre-judging the issues pending admitted writ petitions before the Supreme Court. Various banks, financial institutions, respondent public authority and the RTI applicant have already impleaded party and are presenting their arguments before the apex court," the CIC says.
 
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