RBI stonewalls RTI activists on derivatives fraud

The Reserve Bank of India, having first refused to furnish information under the Right to Information Act about the Rs 32,000-crore derivatives fraud despite a Central Information Commission order, is now refusing to reveal expenditure it incurred in challenging the CIC decision in the Delhi high court.

“The information as to fee of lawyers and others are exempt from disclosure under the RTI Act,” the RBI has said in its reply to a request seeking information on total legal expenses incurred in the case. The RTI query was filed by Kishanlal Mittal, a Mumbai-based RTI activist, early this year.

Besides, the RBI has also refused to provide information on several other cases in which it has challenged the CIC’s order, stating instead that furnishing information could “prejudicially affect the interest of RBI in prosecuting the said cases”.

According to CJ Karira, an RTI expert based in Hyderabad, the RBI cannot reject such applications. “As per a CIC decision all banks — even private ones like HSBC — are supposed to file quarterly returns with the RBI regarding legal expenses incurred by them. It is therefore funny that the RBI does not want to disclose this information,” Karira said.

In 2007-08, due to alleged supervisory lapses on the part of the RBI, several Indian companies that bought exotic derivatives cumulatively lost about Rs 32,000 crore. Those affected were mainly exporters who had been persuaded to use sophisticated derivative products to hedge risks owing to currency fluctuations.
Subsequently, affected parties filed RTI applications with the RBI seeking details on the derivatives fraud. Many were rejected on “fiduciary” grounds despite a CIC order in favour of an applicant calling it a matter of national importance.

However, the RBI challenged the order in the Delhi high court. The case is likely to come up before the court in October.

The RBI has not only refused to share information with the public on the exotic derivatives fraud, but also with Parliamentarians. In a reply to queries form the Lok Sabha, the RBI has said that it has not “quantified the quantum of loss” caused to Indian companies and individuals due to forex derivatives contracts.