The Supreme Court has increased transparency in the banking sector by holding that the Reserve Bank of India (RBI) cannot deny information sought under the right to information (RTI) law merely by citing economic interest and the central bank’s fiduciary relationship with banks.

The court was hearing a bunch of petitions related to citizens asking information regarding reports made by RBI after inspection of financial institutions under Banking Regulations Act, 1949.

A bench of justices MY Eqbal and C Nagappan said that many public information officers routinely denied information sought under RTI “under the guise of one of the exceptions” provided under the RTI Act, 2005 referring to the provision of exception under economic interest.

The court chose to root for the cause of an informed citizen as quoted in the report: “Because an informed citizen has the capacity to reasoned action and also to evaluate the actions of the legislature and executives, which is very important in a participative democracy, this will serve the nation’s interest better” but also added a caveat that the central bank could not be “put in a fix by making it accountable to every action taken by it”.

The bench was quoted as saying, “RBI is supposed to uphold public interest and not the interest of banks. RBI is clearly not in any fiduciary relationship with any bank,” the court said. “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.”

“The ideal of government by the people makes it necessary that people have access to information on matters of public concern. The free flow of information about affairs of government paves way for debate in public policy and fosters accountability in government.

Describing as “misconceived” the contention by the RBI that the disclosure of information sought under RTI would go against the economic interest of the nation, Justice Eqbal speaking for the bench said.

“Economic interest of a nation in most common parlance are the goals which a nation wants to attain to fulfil its national objectives. It is the part of our national interest, meaning thereby national interest can’t be seen with the spectacles (glasses) devoid of economic interest.”

Holding that the RBI was supposed to uphold public interest and not the interest of individual banks by, the court said “The RBI has a statutory duty to uphold the interest of the public at large, the depositors, the country’s economy and the banking sector.

“Thus, the RBI ought to act with transparency and not hide information that might embarrass individual banks. It is duty bound to comply with the provisions of the RTI Act and disclose the information sought by the respondents herein.”

“RBI is clearly not in any fiduciary relationship with any bank. 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 court said reminding the apex bank of its statutory role as a regulator.

Thus, the court said the “RBI ought to act with transparency and not hide information that might embarrass individual banks. It is duty bound to comply with the provisions of the RTI Act and disclose the information sought by the respondents herein.”

The court said that while addressing the question whether all the information sought for under the RTI Act can be denied by the RBI and other banks to the public at large on the ground of economic interest, commercial confidence, fiduciary relationship with other bank on the one hand and the public interest on the other.

The RBI had moved the Supreme Court challenging the CIC order asking the apex bank to disclose information sought under the RTI by five people on the violation of the RBI guidelines by the various public sector banks and the information on defaulters of loan.

Dismissing the plea by the RBI in five cases, the court said, “We have given our anxious consideration to the matter and came to the conclusion that the Central Information Commissioner has passed the impugned orders giving valid reasons and the said orders, therefore, need no interference by this court.

Having rejected the plea by the RBI, the court also said that neither the fundamental rights nor RTI have been provided in absolute terms.

“It is true that gone are the days of closed doors policy making and they are not acceptable also but it is equally true that there are some information which if published or released publicly, might actually cause more harm than good to our national interesta if not domestically it can make the national interests vulnerable internationally,” the court said in its order.

The court said that when it comes to national economic interest, disclosure of information about currency or exchange rates, interest rates, taxes, the regulation or supervision of banking, insurance and other financial institutions, proposals for expenditure or borrowing and foreign investment could in some cases harm the national economy, particularly if released prematurely.

However, the court said “lower level economic and financial information, like contracts and departmental budgets should not be withheld under this exemption”.

This, the court said “makes it necessary to think when or at what stage an information is to be provided i.e., the appropriate time of providing the information which will depend on nature of information sought for and the consequences it will lead to after coming in public domain.”