SC pulls up RBI to act against disreputable business practices

New Delhi: The Supreme Court Wednesday held that RBI should take rigid action against those banks and financial institutions which have been indulging in "disreputable business practices" and said it cannot withhold information on defaulters and other issues covered under the RTI Act.

"We have surmised that 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. It is the responsibility of the RBI to take rigid action against those banks which have been practicing disreputable business practices," a bench comprising Justices M Y Eqbal and C Nagappan said.

The apex court clarified that Reserve Bank of India (RBI) cannot withhold information under the "guise" of confidence or trust with financial institutions and is accountable to provide information sought by general public.

"RBI and the Banks have sidestepped the general public's demand to give the requisite information on the pretext of 'Fiduciary relationship' and 'Economic Interest'.

This attitude of the RBI will only attract more suspicion and disbelief in them. RBI as a regulatory authority should work to make the Banks accountable to their actions.

"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 bench said.

The apex court said that RBI has a duty to uphold the interest of the public at large was duty bound to comply with the provisions of the RTI Act and disclose the information sought by the people.

"From the past we have also come across financial institutions which have tried to defraud the public. These acts are neither in the best interests of the country nor in the interests of citizens. To our surprise, RBI as a Watch Dog should have been more dedicated towards disclosing information

to the general public under the Right to Information Act," the bench said.

The court's judgement came on batch of pleas transferred from various High Courts where the Central Information Commission (CIC) had directed RBI to furnish the information sought by applicants under the RTI Act. 

The apex court also termed as "misconceived" the submision that disclosure of information sought for will go against the economic interest of the nation.

"Economic interest of a nation in most common parlance are the goals which a nation wants to attain to fulfil its national objectives. It is the part of our national interest, meaning thereby national interest can't be seen with the spectacles(glasses) devoid of economic interest.

"It includes in its ambit a wide range of economic transactions or economic activities necessary and beneficial to attain the goals of a nation, which definitely includes as an objective economic empowerment of its citizens. It has been recognized and understood without any doubt now that one of the tool to attain this goal is to make information available to people," the court said.

Slamming the RBI and other financial institutions for trying to cover up their acts from public scrutiny, the apex court said,"it had long since come to our attention that the Public Information Officers (PIOs) under the guise of one of the exceptions given under RTI Act, have evaded the general public from getting their hands on the rightful information that they are entitled to".

"Legislature's intent was to make available to the general public such information which had been obtained by the public authorities from the private body.

"Had it been the case where only information related to public authorities was to be provided, the Legislature would not have included the word 'private body'. As in this case, the RBI is liable to provide information regarding inspection report and other documents to the general public," the bench said.

The court further said that an "informed" citizen has the capacity to evaluate the actions of the legislature and executive, which is very important in a participative democracy and this will serve the nation's interest in a better way.

"Recognizing the significance of this tool it has not only been made one of the fundamental rights under, Article 19 of the Constitution but also a Central Act has been brought into effect on October 12, 2005 as the Right to Information Act, 2005.

"The ideal of 'Government by the people' makes it necessary that people have access to information on matters of public concern. The free flow of information about affairs of Government paves the way for debate in public policy and fosters accountability in Government. It creates a condition

for 'open governance' which is a foundation of democracy," the court held.