In a recent judgment, delivered today, Supreme Court has ruled that RBI and the Financial Institutions do not share a Fiduciary Relationship and RBI under RTI Act, 2015 is bound to provide information related to them/other banks.

Question before the Court:
The main issue before the Court was whether all the information sought for under the Right to Information Act, 2005 can be denied by the Reserve Bank of India and other Banks to the public at large on the ground of economic interest, commercial confidence, fiduciary relationship with other Bank on the one hand and the public interest on the other. If the answer to above question is in negative, then upto what extent the information can be provided under the 2005 Act.

Facts of the Case(s):
CPIO of Reserve Bank of India in different cases had denied information sought under RTI Act, 2005. The information sought and the common reason for denial were as under:

Broad Information(s) sought:
(a) confirmed/draft minutes of meetings of Governing Board/Board of Directors/Committee of Directors
(b) investigation/inspection and audit reports
(c) supervisory action taken
(d) copies/details of advisory letters
(e) uploading the entire list of Bank defaulters on the RBI website
(f) list of banks which were issued show cause notices.
(g) RBI affidavit stating total mark to market losses on account of currency derivatives
(h) amount of losses suffered by Indian Business houses
(i) NABARD report on 86 N.P.A. Accounts for Rs. 3806.95 crore of Maharashtra State Co-operative Bank Ltd.
(j) copies/details of all the complaints filed with RBI against SCB, written replies/correspondences made and findings recordings or enquiry reports
(k) action taken against scams/financial irregularities of United Mercantile Cooperative Bank Ltd.
(l) copies of complaints received by RBI against illegal working of the said bank, including violations of the Standing Orders of RBI as well as the provisions under Section 295 of the Companies Act, 1956
(m) finding of the enquiry made by RBI, actions proposed and taken against the bank and its officials-official notings, decisions, and final orders passed and issued.

Broad Reasons for denial:
1. the Information sought was maintained by the bank in a fiduciary capacity and was obtained by Reserve Bank during the course of inspection of the bank and hence cannot be given to the outsiders.
2. disclosure of such information may harm the interest of the bank & banking system.
3. the information is exempt from disclosure under Section 8(1)(a) (d) & (e) of the RTI Act, 2005
4. the disclosure can affect the economic interest of the country and also affect the commercial confidence of the bank.

Central Information Commission has directed RBI to provide information to the applicants but RBI had approached Delhi/Bombay High Courts and CIC orders were stayed.

Broad Key Points of the Judgment:

1. The RTI Act, 2005, as noted in its very preamble, does not create any new right but only provides machinery to effectuate the fundamental right to information. The institution of the CIC and the SICs are part of that machinery.
2. RTI Act, 2005 contains a clear provision (Section 22) by virtue of which it overrides all other Acts including Official Secrets Act.
3. Notwithstanding anything to the contrary contained in any other law like RBI Act or Banking Regulation Act, the RTI Act, 2005 shall prevail insofar as transparency and access to information is concerned.
4. RTI Act 2005 being a later law, specifically brought in to usher transparency and to transform the way official business is conducted, would have to override all earlier practices and laws in order to achieve its objective.
5. The only exceptions to access to information are contained in RTI Act itself in Section 8.
6. RBI does not place itself in a fiduciary relationship with the Financial institutions.
7. 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.
8. Neither the RBI nor the Banks act in the interest of each other.
9. RBI is supposed to uphold public interest and not the interest of individual banks.
10. RBI is clearly not in any fiduciary relationship with any bank.
11. RBI has no legal duty to maximize the benefit of any public sector or private sector bank, and thus there is no relationship of ‘trust’ between them.
12. RBI has a statutory duty to uphold the interest of the public at large, the depositors, the country’s economy and the banking sector.
13. RBI ought to act with transparency and not hide information that might embarrass individual banks.
14. RBI argument that the disclosure would hurt the economic interest of the country is totally misconceived, baseless and unsubstantiated.
15. The exemption contained in Section 8(1)(e) applies to exceptional cases and only with regard to certain pieces of information, for which disclosure is unwarranted or undesirable.
16. The information is available with a regulatory agency not in fiduciary relationship, there is no reason to withhold the disclosure of the same.
17. Where information is required by mandate of law to be provided to an authority, it cannot be said that such information is being provided in a fiduciary relationship.
18. The Financial institutions have an obligation to provide all the information to the RBI and such an information shared under an obligation/ duty cannot be considered to come under the purview of being shared in fiduciary relationship.
19. One of the main characteristic of a Fiduciary relationship is “Trust and Confidence”. Something that RBI and the Banks lack between them.
20. The RTI Act 2005 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.
21. Even if RBI and the Financial Institutions share a “Fiduciary Relationship”, Section 2(f) would still make the information shared between them to be accessible by the public.
22. Banks are trying to cover up their underhand actions, they are even more liable to be subjected to public scrutiny.
23. Many Financial Institutions have resorted to such acts which are neither clean nor transparent. The RBI in association with them has been trying to cover up their acts from public scrutiny.
24. It is the responsibility of the RBI to take rigid action against those Banks which have been practicing disreputable business practices.
25. The ideal of ‘Government by the people’ makes it necessary that people have access to information on matters of public concern.

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