Right to Information vs Disclosure of defaulters

Background 

In June 2017, the RBI had identified 12 large corporate accounts that comprised about 25 per cent of the total Non-Performing Assets for resolution under the Insolvency and Bankruptcy Code (IBC). The central bank had directed banks to file insolvency applications against these accounts.  According to a note from the Insolvency and Bankruptcy Board of India (IBBI), the defaulters had a claim of Rs 3.45 lakh crore against a liquidation value of Rs 73,220.23 crore. Resolution plans in respect of six such debtors have been approved and other accounts are at different stage of the process.

Analysis

The Central Information Commission (CIC) has again directed the Reserve Bank of India (RBI) to disclose the list of large loan defaulters to activist Nutan Thakur.  She had initially filed her RTI request in September 2017, on the basis of a lecture by RBI Deputy Governor Viral Acharya who said the RBI had directed banks to file insolvency applications against 12 large accounts comprising about 25% of the total non-performing assets.

"The IAC (internal advisory committee) has recommended that the Reserve Bank of India should initially focus on stressed assets which are large, material and aged, in that they have eluded a viable resolution plan despite being classified as NPAs (non-performing assets) for a significant amount of time," Acharya had said.

The RBI had refused to provide the details to Thakur by calling them ”confidential information”, following which she approached the CIC. “The CPIO (chief public information officer) denied the information under section 8 (1) (d) (commercial confidence) of RTI Act whereas the first appellate authority held that the exemption under section 8 (1) (d) does not apply to the case and but falls under Section 45C and E of the RBI Act as per which the credit information submitted by all banks shall be treated confidential,” PTI quoting Information Commissioner, Suresh Chandra said.

In April 2019, the Supreme Court has directed the RBI to disclose information pertaining to its annual inspection report of banks and the list of wilful defaulters under Right to Information Act (RTI). The apex court also asked the RBI to review its policy to disclose information relating to banks under the RTI Act.

The Right to Information provides a two-stage dispute resolution process. In the process, a Chief Public Information Officer receives and responds to the application. His decision to deny or provide partial information is first challenged before a senior officer within the organisation called the first appellate authority. If the applicant is still unsatisfied, a second appeal can be filed before the CIC.

The RBI at the CIC hearing said they can provide the information but were in no position to do so when the RTI application was filed more than 20 months ago on September 16, 2017. It could not disclose the list because of pending resolution and defaulter list had not been finalised. On the issue of note sheets and correspondence, the central bank said it not only pertains to the list of willful defaulters but also the borrowers suffering economic distress.

At the hearing on May 2, 2019, Thakur submitted that “the information is being sought purely in public interest because the list of defaulters is of immense public importance and the people have a right to know about these defaulters,” says the order. 

Assessment 

Our assessment is that the RBI has been previously ordered by the CIC to disclose the list of defaulters. It can be noted that in November 2018, the CIC had issued a show-cause notice to the then governor of the RBI for not complying with the apex court’s order on disclosure of wilful defaulters’ list who had not paid loans of Rs 50 crore and more. The panel also enquired with Prime Minister’s Office for not complying with its directive to disclose the letter from former RBI governor Raghuram Rajan on bad loans. 

Several categories of information are declared by the RBI as not disclosable as part of their ‘disclosure policy’ and the RBI calls the exceptional clauses under the RTI Act as ‘enabling’ provisions. But in many cases, the evasion of loan is a misappropriation of public money, which public have a right to know.

According to the Supreme Court, the RBI is supposed to uphold public interest and is not in any fiduciary relationship with any bank. Also, as per as the RBI’s Master Circular paragraph 25 on Customer Confidentiality Obligation  “The scope of the secrecy law in India has generally followed the common law principles based on implied contract. The bankers' obligation to maintain secrecy arises out of the contractual relationship between the banker and customer, and as such no information should be divulged to third parties except under circumstances which are well defined. The following exceptions to the said rule are normally accepted:

(i) Where disclosure is under compulsion of law

(ii) Where there is duty to the public to disclose

(iii) Where interest of bank requires disclosure and

(iv) Where the disclosure is made with the express or implied consent of the customer."

We feel the RBI has options to challenge the CIC’s order in a court of law or comply with the order.