SC of India has Directed Reserve Bank to Disclose Wilful Defaulters List and Annual Inspection Report under RTI

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The Reserve Bank of India (RBI) will most likely revoke its policy of 2016 to reject the information disclosure of big defaulters under the Right to Information (RTI) Act following a Supreme Court recourse. The move will allow the central bank to disclose the annual inspection reports of the banks and the list of wilful defaulters under the RTI Act. The Supreme Court on Friday ruled that the RBI was duty bound to disclose information related to wilful defaulters. The banking regulator has not officially responded to the SC order so far. Sources stated that the RBI would discuss the SC Order for the next course of action on information disclosure in accordance with the RTI Act. There was no response from an email sent to the Apex Bank. The RBI also did not reveal whether it would immediately share or seek time to review the SC order, before acting on the information sought by RTI applicants. According to another source, considering that the SC has said it was giving the RBI “one last opportunity”, there is not much that RBI could do but abide by the order and withdraw its 2016 application on non-disclosure policy for RTI query. Any laxity will invite contempt of court proceedings against the central bank. The apex court, while directing the RBI to withdraw its non-disclosure policy, warned that any future violation of the transparency law would be taken “seriously”. The SC held that the RBI’s non-disclosure policy was in violation of a top court order passed in 2015, which directed the central bank to disclose information under the provisions of the RTI Act.Whether internal evaluation reports should be made public was divided into opinions. Former RBI Deputy Governor Rama Subramaniam Gandhi told IANS: “It is a standard practice all over the world that bank supervisors keep the inspection report confidential. Public disclosures can undermine public confidence in the banks through uninformed and out of context interpretations.”

He also said that public disclosures will not help the banks recover the defaulting parties’ money. However, proxy advisory and corporate governance firm InGovern said that the SC order was a war on non-performing assets (NPAs) and that being shareholders of the public sector banks, people had the right to know such information. “It (the order to disclose information) may not help the banks, but it will definitely help the investors in the banks and the taxpayers in general if they get to know about the wilful defaulters and what exactly the RBI said in the inspection reports. It will surely help the shareholders track down the divergences made by many banks on NPA dislosures,” said Sriram Subramanyam, Managing Director at InGovern. “Taxpayers are the shareholders in PSU banks and they are paying for the wilful defaulters. They are therefore entitled to know the quantity of NPAs and who are deliberate defaulters. That is a war against the NPAs, “he said.

This is for the second time in a month that the SC has struck down some of the key decisions of the RBI taken during its former Governor Urjit Patel’s tenure. On April 2, the apex court declared RBI’s February 2018 NPA circular as “ultra vires,” mandating insolvency proceedings. In that order, the SC quashed the February 12, 2018 RBI circular which gave the lender banks six months’ time to resolve their stressed assets or move under insolvency proceedings against defaulters in loans worth over Rs 2,000 crore.

With regard to the non-disclosure policy, the case was filed after the petitioners were denied copies of inspection reports of ICICI Bank, Axis Bank, HDFC Bank and State Bank of India from April 2011 till December 2015. They had sought the same under the RTI Act in December 2015. In January this year, the court had issued a contempt notice to the RBI.

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