SC Tells Reserve Bank Of India To Make List Of Financial Defaulters Public Under RTI Act

The Supreme Court held that the Reserve Bank of India is bound to disclose names of loan defaulters under the RTI Act and also asked it to make public inspection reports containing critical assessment of the functioning of banks and financial institutions while warning the banking regulator against future violations.

A bench of Justices L Nageswara Rao and M R Shah directed the RBI to withdraw its present disclosure policy under which this information is not disclosed to the public under the Right to Information Act.

The court pulled up RBI for not complying with its 2015 order by which it was directed to reveal the information under the transparency law.

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Though the bench held that RBI committed contempt of court, it, however, did not pass any punitive order and let the regulator off with a warning that any further non-compliance of its order would be taken by it ¡°seriously¡± and RBI would have to face contempt proceedings.

The apex court, in its 2015 judgment, had said, ¡°We have surmised that many financial institutions have resorted to such acts which are neither clean nor transparent.

RBI, in association with them, has been trying to cover up their acts from public scrutiny. It is the responsibility of RBI to take rigid action against those banks which have been practising disreputable business practices.¡±

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¡°From the past, we have also come across financial institutions which 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 watchdog should have been more dedicated towards disclosing information to the general public under the Right to Information Act,¡± it had said.

Despite the SC direction to disclose information on shady business practices of financial institutions under RTI, the banking regulator has consistently refused to reveal information and framed a disclosure policy not in line with the SC order.

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Taking exception to RBI¡¯s resistance to bring transparency to its functioning, the court said, ¡°Though we could have taken a serious view of the respondents (RBI and others) continuing to violate the directions issued by this court, we give them a last opportunity to withdraw the disclosure policy insofar as it contains exemptions which are contrary to the directions issued by this court. They are duty-bound to furnish all information relating to inspection reports and other material apart from the material that was exempted in the judgment.¡±

The court rejected RBI¡¯s contention that the reports contain confidential information on banking operations and it is not feasible to make public the entire report. It also turned down the plea of RBI that the 2015 verdict should be re-examined.