Explained: What will be the impact of SC order directing RBI to disclose information under RTIhttps://indianexpress.com/article/explained/explained-what-will-be-the-impact-of-sc-order-directing-rbi-to-disclose-information-under-rti-5696817/

Explained: What will be the impact of SC order directing RBI to disclose information under RTI

A bench headed by Justice L Nageswara Rao also directed the RBI to review its policy to disclose information relating to banks under RTI.

Explained: What will be the impact of SC order directing RBI to disclose information under RTI
New Delhi: Reserve Bank of India Emblem, in New Delhi, Monday, Jan. 7, 2019. (Express Photo by Tashi Tobgyal/File)

The Supreme Court Friday directed the Reserve Bank of India (RBI) to disclose information pertaining to its annual inspection report of banks and other material under the Right to Information (RTI) Act unless they are exempted under law. A bench headed by Justice L Nageswara Rao also directed the RBI to review its policy to disclose information relating to banks under RTI. The bench did not go ahead with contempt proceedings against the RBI for not complying with its orders but said it was giving a last opportunity to comply.

Which information is being sought by the petitioners?

The petitioners had sought details pertaining to the RBI’s annual inspection reports of ICICI Bank, AXIS Bank, HDFC Bank and State Bank of India from 01.04.2011 to the date of filing of the application. Information relating to the Sahara Group of Companies and Bank of Rajasthan was also sought from the RBI. The RBI did not provide information in view of the exemption from disclosure under Section 8(1)(a) and (b) of the RTI Act, as the disclosure was not in economic interest of the State, and would adversely affect the competitive position of the third party. Separately, details of showcause notices and fines imposed by the RBI on various banks were also sought.

What is the impact of the Supreme Court order?

The RBI will be required to provide annual inspection reports and other material (such as details of penalties) unless it is exempted under law. While this will provide greater transparency about the affairs of banks, it has the potential to affect the regulatory process of the RBI. Information contained in RBI annual inspection reports relating to banks is highly sensitive. The central bank through these efforts tries to ensure that the banking system remains smooth with minimum disruptions. Greater bank disclosures help investors and depositors, but it can also have unintended consequences.