Irregularities in banks to be made public

The Information Commissioner of the Central Information Commission (CIC) Mr. Shailesh Gandhi has ruled that if there are irregularities in the functioning of a bank pursuant to which action has been taken by the Reserve Bank of India (RBI), citizens have a right to know about the same. Hearing an appeal filed by Ashwini Dixit, the Central Information Commission directed the Reserve Bank of India (RBI) to provide information regarding action taken by the RBI against scams/economic inconsistencies of United Mercantile Cooperative Bank (UMC Bank) along with the daily progress report. Earlier, the Public Information Officer (PIO) of the RBI refused to share report of the scams/economic inconsistencies of United Mercantile Cooperative Bank along with daily progress reports citing Sections 8(1)(a) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence; and (e) of the RTI Act.

The RBI submitted that the information sought by the appellant is based on the scrutiny conducted by the RBI in exercise of its powers under Section 35(1A) of the Banking Regulation Act, 1949 (the BR Act) and disclosure of inspection reports and the information submitted to the RBI or collected by the RBI in terms of Section 27 of the BR Act would be detrimental to the interest of depositors, public and banking policies. The RBI argued that the misreading or out of context appreciation of the observations made in the inspection reports may be hazardous. The consequences may be irreversible and may result in dilution of confidence of the banking system. The adverse market reactions to such sensitive information may be phenomenal and may be of systemic risk to the economy, banks being the backbone of the economy.

The CIC disagreed with the argument of the RBI that citizens were not mature enough to understand the implications of weaknesses, and the RBI was the best judge to decide what citizens should know. Citizens, who are considered mature enough to decide on who should govern them, who give legitimacy to the government and framed the Constitution of India must be given selective information about weaknesses exposed in inspection to ensure that they have faith in the banking sector. They must see the financial and banking sector only to the extent which RBI wishes.

The CIC observed that “It follows that if the RBI made mistakes, or there is corruption, citizens should suffer. This appears to go against the basic tenets of democracy and transparency. The idea that citizens are not mature enough to understand and will panic and harm their own interests, is repugnant to democracy. The case for transparency is that when citizens are watching and monitoring Institutions, they are forced to be on their toes, and will continuously improve……If there are irregularities in the functioning of a bank pursuant to which action has been taken by RBI, as sought in query 1, citizens certainly have a right to know about the same. A larger public interest would be served by disclosing this information under Section 8(2) Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. of the RTI Act. The nation’s interest would be better served through transparency and exposure of arbitrary, wrong, corrupt or illegal acts.”