In a setback for banks, the Supreme Court for now has refused to send their pleas to a larger bench where they have opposed RTI (Right to Information) requests seeking disclosure of information about customers and names of big defaulters. The court order means that Justice LN Rao led bench will continue hearing the petitions by banks, which wanted a larger bench to examine the issue of immense public importance involving privacy of customer information.
In 2015, a 2-judge bench of the top court had made the Reserve Bank of India (RBI) accountable under the RTI Act, thereby allowing public disclosure of RBI’s annual inspection reports and list of defaulters. Despite vociferous opposition to the order by the RBI and various banks, the court has dismissed various requests thereafter to stay its ruling.
Appearing for HDFC Bank, senior lawyer Mukul Rohatgi argued that private banks weren’t created by a statute, have their shared traded and aren’t covered under the ambit of the RTI Act. HDFC Bank submitted that it wasn’t a party to the case which led to the court order mandating RTI disclosure for banks.
HDFC Bank questioned the public interest under which petitioners were interested in getting inspection reports prepared by the RBI, claiming that they’re highly confidential and any disclosure will invade right to privacy. Arguing that banking is a business of faith and trust with millions of accounts, HDFC Bank submitted that the entire banking fabric will be finished if all inspection reports are revealed as banks are the guardian of commercial secrets.
IDFC Bank and Kotak Mahindra Bank told the court that RBI conducts inspections and shares reports with the Centre, and in case of any irregularity, the bank can be given a notice before making the report public. Banks opposed making reports public before following due procedure, claiming that the economy will suffer if people start panicking and seeking redemptions of their deposits.
Appearing for the petitioner, lawyer Prashant Bhushan urged the court to see the inspection reports to know what information was being given. Claiming that the risk assessment report of Union Bank of India removed names of defaulters, petitioners claimed that inspection reports provide details of a bank’s functions and supervise its lending policy to ensure there is an internal mechanism in place to check defaulters like Vijay Mallya.
Arguing that inspection reports don’t give names of any customer and aren’t confidential in nature, petitioners contended that the top court had noted plunder of public money worth Rs. 10 lakh crores. Citing the RTI Act which says that people are masters and guardians of public interest and want to know what public authorities like the RBI are doing, petitioners added that every aspect of the RTI Act and exemptions had already been discussed in the apex court verdict where all banks were held guilty of contempt. Petitioners argued that not only were the Indian Banks Association and ICICI Bank were heard, but all banks were waiting and watching for 3 years when IBA (Indian Banks Association) was arguing for them in the top court and parallel proceedings were continuing before the Central Information Commission (CIC).
