Banks' legal battle for RTI exemption

The Government at Delhi, RBI and banks – both public and private – are jointly fearing the RTI and the demand for information as a right. For the last fifteen years they have been fighting it. On August 18, the Supreme Court rejected another attempt of the banks to wriggle out of accountability and responsibility under Right to Information Act. Various public sector (like SBI) and private banks such as HDFC, sought exemption from disclosing any information related to their customers, trade secrets, risk ratings or any unpublished price sensitive information from the Right to Information (RTI) Act.

Interestingly, the Central government has also joined the 10 banks in demanding exemption to banks from RTI. They have attempted to seek a remedy which was unheard of, i.e., recalling the judgment of Supreme Court in Jayantilal N Mistry case in 2015, directing disclosure of inspection reports of banks as well as details of wilful defaulters and rejecting the ground of the central bank that they had fiduciary relationship with the banks.

The Bench of L Nageswara Rao has dismissed such a plea to cancel the orders of SC in Jayantilal N Mistry case and reiterated that RBI should be transparent and revitalised in that order. Banks under the leadership of Centre and RBI are waging repeated legal battles to prevent the disclosure. It is the basic principle of good governance that lack of transparency facilitates the scandals. it necessary for the RBI to disclose financial information related to private and public banks under the RTI Act.

Almost a dozen banks have filed separate petitions, based on the newly discovered right to privacy as held in KS Puttaswamy v Union of India. They pleaded that they being privy to sensitive information like personal details of its account holders, prospective loans and other financial transactions are required to keep such info confidential and maintain privacy. It's a tragedy that as the managers of public money and trustees of public wealth, banks are arguing that loan defaults of big corporate personalities are either private or commercially confidential data of those who cheated the banks. At the same time, they want to hide the 'inaction' or 'negligence' or possibly collusion of some of their officers with scamsters, and they use the excuse of 'fiduciary' relationship. When Supreme Court rejected it, they developed theory of

'commercial confidence' or 'data privacy. Surprisingly the Central Government joins these petitioners. Whom are they facilitating- the scamsters, big loan defaulters etc? Then why dacoits and way side robbers should be jailed?

Now, all of them are singing the song of 'sensitive' information. None knows what it is. Is it sensitive because it relates to security of the country? Or because the banks are trying to recover entire amount in a strategic way which they think fail if revealed before recovery? Or is it sensitive because their fraud will be exposed? Earlier it was RBI who on behalf of defaulting fraudsters and inefficient banks refused even to disclose the names of defaulters. Now it is SBI and PNB. Then four private banks – HDFC Bank, Axis Bank, ICICI Bank and Yes Bank – joined them saying that RBI in its role as banker to the government and banking regulator receives and holds a lot of sensitive information, the disclosure of which may not be in the interest of the nation or serve public interest. What is meant by 'may not be'? As per general expressions of law 'may' includes 'may not' and 'may not,' 'may'. It is a general talk. How do they establish that it is in public interest to hide information about the loanees who cheated banks and the banks which are fighting legal battles to protect information interests of those cheats hiding their interests?

Prashant Bhushan argued that "these inspection reports just give details of working of the bank including supervision of its lending policies so as to check defaulters like Vijaya Mallya ad Mehul Chokshi. The whole document doesn't give names of any customer. There is nothing confidential in this report." He also said that the judgment was delivered only after all the banks through Indian Banking Association were heard.

They know that banks do not have any case, either legal or moral. Then they try to find out any procedural points to start fresh litigation. Senior counsel Mukul Rohtagi, appearing for the HDFC Bank, argued that his client bank was not a party when the earlier order mandating disclosure was passed. He said: "Today's petitions are different and there is no need for Justice Nageswar Rao's bench to hear them. Senior Advocate appearing for the RTI activist, argued that the original Bench should only hear these petitions, which was finally accepted by the Bench.

Solicitor General Tushar Mehta is defending the public sector bank SBI on the same lines of Rohtagi along with senior counsel KV Vishwanathan. They wanted this matter should be heard by a larger bench as privacy of customers is of utmost importance to a bank, who have "guarded commercial secrets". Does it not mean that the Government is with these Banks who are guarding the defaulters?

According to them, disclosure of inspection reports as invasion of privacy of banks. Whether institutions like banks have privacy? Is it not a human right of individuals? Do banks have a duty to secure the privacy interests of their customers and employees, even though they are defaulters? If they have evaded returning of huge amounts taken in advance, they have to be sued in open courts. Will they hide all this information including so-called 'commercial confidential' information? If they have misled the banks and produced fake securities, are they entitled to claim privacy to escape prosecution?

Rohtagi raised a point that RTI will not apply to private banks. He said that the RTI Act does not apply to private entities as they are not public authorities under the Act and therefore, information pertaining to such banks and their customers cannot be sought under the RTI Act, let alone confidential/sensitive information of such banks/FIs. He argued: "No bank customer wants his safeguards/parameters should be disclosed to anyone. These inspections prepared by RBI are treated as highly confidential. Banking business is a business of faith and trust. it has millions of accounts; entire banking fabric will be finished if all the inspection reports are made public. Besides, private banks' shares are traded and they are not created by any statute, thus not covered under the RTI Act."

The Supreme Court 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."

The petition of these banks not to send these petitions to Justice L Nageswar Rao bench were finally rejected on 18th August 2021, by the Bench headed by Justice Nazeer. It refused to entertain their petitions seeking exemption from disclosing any information related to their customers, trade secrets, risk ratings or any unpublished price sensitive information from the Right to Information (RTI) Act.

Instead of pursuing the litigation endlessly, the banks should focus more on recovering the loans that are advanced and initiate action against the officers who were negligent in accepting misleading or insufficient securities etc that converted some of their confidential customers into non-performing assets.

(The author is Dean & Professor, School of Law, Mahindra University, Hyderabad, and former Central Information Commissioner)

(The opinions expressed in this column are those of the writer. The facts and opinions expressed here do not reflect the views of The Hans India)