The inspections are done by the Reserve Bank of India (RBI) and not even the employees of the banks, except the top management, are allowed to see it. But a 2015 ruling by the Supreme Court telling the RBI to make the reports available under the RTI Act changed all that.
So far no such report had been made public as banks, and even the central government, have challenged the ruling in various ways.
State Bank of India, HDFC Bank, Kotak Mahindra Bank, and IDFC Bank filed a petition against a notice, in what could be a last-ditch attempt by the Indian banking system to keep confidential information under wraps. The notice was given to the banks under Section 11(1) of the RTI Act seeking third-party disclosure requirements.
It is important to recall here that the RBI allowed making such reports public as a result of the Supreme Court order in 2015. While the Apex court had originally asked for the full report, but subsequently, it was agreed that not the entire report would be made public, but the relevant portions on bad debts, and borrowers etc. Nevertheless, even such information can disclose much information about the borrowers, which violates various client confidentiality clauses of banks, the lenders have argued.
In April this year itself, the Supreme Court had dismissed one such attempt by the Central government and 10 banks. In early July, the court had again spurred Punjab National Bank against such a request.
In its original ruling in 2015 ruling, the SC had chastised the RBI for trying to keep the inspection reports confidential.
“RBI has no legal duty to maximize the benefit of any public sector or private sector bank, and thus there is no relationship of ‘trust’ between them. RBI has a statutory duty to uphold the interest of the public at large, the depositors, the country’s economy, and the banking sector,” the Supreme Court had ruled.
In April this year, the SC refused to recall its order as there was no such provision.
“RBI has to act with transparency and not hide information that might embarrass the banks and that it is duty-bound to comply with the provisions of the act and disclose the information sought,” the SC ruled on April 21.
In their latest filing, SBI argued that banks are driven by the “trust and faith” of their clients that should not be made public. Private banks, such as HDFC Bank argued that RTI Act is applicable for government departments, and the act doesn’t apply for private banks.
Besides, the banks argued that privacy is a fundamental right, and therefore should not be violated by making clients’ information public.
The court is scheduled to hear the case on July 22.