Article for SIDBI Descriptive- Why turn the RTI heat on the RBI?

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The Supreme Court has ruled that the Reserve Bank of India (RBI) and commercial banks must reveal the names of defaulters to people seeking such information under the Right to Information Act (RTI). On the face of it, this sounds fair to citizens. But the regulator seems to be getting a raw deal. The RTI Act is meant to reveal reasons that inform policymaking. A citizen can seek clarifications on what the government proposes to do about something of vital interest to her. Banks collect deposits from the public and are accountable to the RBI for the prudent use of such deposits. It would be naïve to expect any citizen who seeks information from banks on, say, their inspection reports to assess the financial strength of the bank or the efficiency of its operations.
Deposits collected by banks are repayable on demand. So, the key consideration for the RBI is to protect depositor interest. The concern that any misinterpretation of information could trigger a run on the bank — and hurt public interest — is not misplaced. Which is why the RBI has argued that in any policy of transparency, there must be processes to ensure that the benefits of supervisory disclosure are weighed against the risk to depositors. The Supreme Court, however, thinks otherwise.
The list of defaulters above Rs 1 crore against whom cases are filed is made public by the Credit Information Bureau (India) Ltd (Cibil). Cibil also maintains records of an individual’s payments pertaining to loans and credit cards from banks and other lenders. The information is used to create Credit Information Reports and credit scores that are provided to lenders to help evaluate loan applications. When there is already accountability to the public, why turn the heat on RBI? Ideally, the RBI and public banks should be excluded from the RTI.



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