The Supreme Court recently provided the Reserve Bank of India (RBI) with one last chance to obey its mandate to disclose both its annual inspection report and banks’ list of wilful defaulters, as prescribed by the Right to Information (RTI) Act.
Understanding the Annual Inspection Report
Every year, RBI conducts a thorough financial investigation into both commercial and public banks. Empowered by Section 35 of the Banking Regulation Act, this investigation ensures adherence to all established rules and regulations. The report delves into risk-based supervision, credit risk, market risk, and operational risk present within any bank, determining the potential for failure.
The Background of the Order
The Supreme Court case Reserve Bank of India Vs Jayantilal N.Mistry and others led to the decree that called for the disclosure of information on the annual inspection report and each bank’s list of wilful defaulters under the RTI Act. These banks are all regulated and monitored by the RBI.
The Position of the RBI
The RBI has previously refused to disclose such information, citing reasons like economic interest, commercial confidence, fiduciary relationships, or public interest with these individual banks. The RBI argued that this information was exempted under Section 8(1)(e) of the RTI Act and Section 45NB of the Reserve Bank of India Act, 1934.
The Supreme Court’s Judgment Summary
RBI should uphold public interest instead of individual banks’ interests. It doesn’t have any fiduciary relationships with any bank. There is no obligation for the RBI to maximize any public or private sector bank’s benefit, negating any ‘trust’ relationship between them. Instead, withholding information could harm the nation’s economic interests.
| Important Points |
|---|
| RBI has a legal duty to uphold public interest |
| There is no ‘trust’ relationship between RBI and banks |
| Withholding information could be harmful for nation’s economic interest |
Aftermath of the Judgment
Post this verdict, the RBI will have to disclose annual inspection reports and additional materials. This move will undoubtedly usher in higher transparency regarding bank affairs, but it may upset the RBI’s regulatory process. The details contained in the RBI’s annual inspection reports are highly sensitive. The central bank uses these measures to ensure a smooth-functioning banking system with minimal disruptions.
About the Right to Information Act, 2005 and Sec 8 of the RTI ACT
The Right to Information Act, or RTI, is a central law that allows citizens to obtain information from a public authority, enhancing transparency and accountability. Section 8 of the RTI Act specifies exemptions from this disclosure of information. These exemptions range from information that could harm India’s sovereignty and integrity, to details that would impede the prosecution of offenders, to information considered confidential by a foreign government.
