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RBI drags feet on sharing info on wilful defaulters and banks’ audit reports

The matter relates to a Supreme Court ruling in April that pulled up the bank regulator on not providing information on defaulters and inspection reports to the public under the RTI Act.

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As the banking sector continues to be saddled by a massive pile of debts, the Reserve Bank of India (RBI) is yet to share information on wilful defaulters and audit reports on banks despite a Supreme Court diktat.

The banking regulator is silent on whether information on wilful defaulters and audit reports should be made open to the public if a concerned bank decides against the transparent sharing of such disclosures. On being specifically asked by DNA Money on whether information would be denied if the banks did not agree to publicise it, the banking regulator declined to comment.

The central bank has recently written to select banks seeking a feedback from them on revealing to public the RBI’s audit and inspection reports on them under the Right to Information (RTI) Act, a source familiar with the development said.

The matter relates to a Supreme Court ruling in April that pulled up the bank regulator on not providing information on defaulters and inspection reports to the public under the RTI Act. This is the second time that the apex court was warning the banking regulator.

In the letter to select banks, the RBI said: “We have received a request under the RTI. Since the information sought by the applicant relates to your bank, under notices of Section 11(1) of the RTI Act, you can make a submission within ten days as to whether RBI can disclose the information. Give reasons as to whether the information sought is exempt from any clause of the RTI Act.” One of the letters was viewed by DNA Money.

When asked on why RBI was delaying the release of the information sought despite a clear direction from the Supreme Court, the regulator told DNA Money that it was “abiding by the orders of the court and the provisions of the RTI Act. The Section 11 of the RTI Act 2005 mandates that a written notice to a third party by the central public information officer (CPIO) should be sent, whenever information proposed to be disclosed by the public authority relates to the third party, and which has been treated as confidential by such third party. This is an invariant procedural as well as a substantive requirement of the Act.”

On April 26, the Supreme Court had warned the RBI.

It had said that any future violation of transparency law would be viewed seriously and that it was giving the regulator “the last opportunity” to provide information to the public under the RTI Act on defaulters and audit and inspection reports of banks and other financial institutions.

Earlier, in 2015, the Supreme Court ruled that RBI had to reveal the names of wilful defaulters, audit and other inspection reports of banks. The court said RBI has a statutory duty to uphold the interests of the public, depositors, country’s economy and the banking sector. Skirting the SC diktat, the RBI introduced disclosure norms in 2016 which blocked the disclosure of information.

This forced an RTI activist to move the SC seeking contempt action against the RBI governor for not complying with the apex court ruling of 2015. The apex court took up the matter again in April 2019. The court did not initiate any contempt proceedings against the RBI but said that the information should be made public.

Considering that banks are saddled with a mountain of non-performing assets (NPAs), many are of the view that inspection reports should be disclosed so that everyone in the system is accountable. If the regulator ensures transparency by making the audit reports public, then the top management of banks would be more accountable. Divergences and flouting of loan policy guidelines could come under check for healthier lending practices.

SC Had Rapped RBI

  • In April, the Supreme Court had pulled up RBI for not disclosing data on defaulters and inspection reports to public under RTI
  • The regulator has recently written to select banks seeking feedback from them on revealing to public RBI’s audit and inspection reports under Right to Information Act
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