Lenders, including SBI, PNB and HDFC Bank, on Tuesday vehemently opposed any disclosure of their “highly confidential and sensitive” inspection and risk assessment reports under the Right to Information Act, saying this would amount to invasion of right to privacy of their lenders and customers, shareholders and employees.
The Reserve Bank of India (RBI) supported the banks’ argument.
The apex court had, in February 2021, revived its 2015 judgment making it necessary for RBI to disclose financial information related to private and public banks under the RTI Act.
While seeking a direction to RBI to exempt information related to their customers, trade secrets, risk ratings, any unpublished price sensitive information from the RTI Act, the lenders argued that they being privy to sensitive information like personal details of account holders, prospective loans and other financial transactions, are required to keep such info confidential and maintain privacy. They also cited the SC’s Aadhar judgment, which said right to privacy is a sacrosanct facet of fundamental rights.
Public disclosure of information pertaining to commercial confidence, business strategies, internal system, risk management, gas, etc would not serve any larger public interest, but would adversely affect the competitive position of banks in a highly competitive private banking sector in our country, the banks, through their respective senior counsels Mukul Rohtagi, KV Vishwanathan, Dushyant Dave and Rakesh Dwivedi, told the top court.
Banks may require the consent of the individual account holders before any such disclosure, they stated, adding that access to technical, personal and highly confidential information pertaining to banks and its customers would not only unfavourably impact and undermine investors’ confidence in banks, but shall also have an impact on the economy at a macro level.
In its February 2021 order, it had dismissed a joint plea by the central government and 10 banks, seeking a recall of the judgment in Jayantilal N Mistry (2015) that mandated RBI to disclose inspection reports of banks as well as details of wilful defaulters on the grounds that the central bank had no fiduciary relationship with the banks.
Four private banks – HDFC Bank, Axis Bank, ICICI Bank and Yes Bank – in their joint petition said that the apex court in earlier judgments had clearly held that even if public interest is considered while determining whether certain information has to be disclosed or not, such determination has to be on case-to-case basis, backed with reasons in writing.
The private banks led by HDFC further argued that the RTI Act does not apply to private entities like them as they are not public authorities under the Act and therefore, information pertaining to such banks/FIs and their customers and employees cannot be sought/provided under the RTI Act, let alone confidential/sensitive information of such banks/FIs.
RBI had in June 2019 communicated to various banks about forwarding and disclosing their inspection and risk assessment report to the applicants under the RTI Act. This “unilateral and arbitrary manner” disclosure, according to banks, was done without affording any opportunity to them to raise objections.
RBI’s senior counsel Jaideep Gupta told the apex court that there over five statutes that mandate the banks to maintain confidentiality about their customers, but now the RTI requirement appears to override such banking provisions.
Counsel Prashant Bhushan argued that the SC in 2015 had given a clear mandate that RBI must disclose the inspection and other reports of lenders so as to check bad debts and NPAs. He said that the banks have sought to reopen the case without filing any review petition.
A Bench led by Justice BR Gavai after a detailed hearing on the bank’s stand reserved its judgment on the issue of maintainability of these petitions. However, it said that other petitions seeking dismissal of the banks’ petitions will be taken up later. The apex court had on April 29, last year dismissed petitions of banks for recall of the SC’s 2015 decision.