A Supreme Court bench led by Justice S.A. Nazeer refused to hear petitions from the various public sector and private banks, including SBI and HDFC Bank, seeking exemption from disclosing any information related to their customers, trade secrets, risk ratings, or any unpublished price sensitive information under the Right to Information (RTI) Act on Tuesday.
It stated that these new petitions will be heard by the original Bench led by L Nageswara Rao, which had previously dismissed a joint petition by the central government and ten banks seeking a recall of the Jayantilal N. Mistry, REED 2015 SC 12009 judgment which mandated the RBI to disclose inspection reports of banks as well as details of wilful defaulters because the central bank had no fiduciary relationship. A Bench chaired by Justice Nazeer stated, "We do not believe it is appropriate to hear the matter." We believe it is fair to refer the case back to J Rao's original bench.” In April, Justice Rao's panel reinstated its 2015 decision requiring the RBI to provide financial information on private and public banks under the RTI Act.
In another attempt to avoid the transparency law, a dozen banks have filed separate petitions, claiming that because they have access to sensitive information such as personal details of account holders, prospective loans, and other financial transactions, they are required to keep such information confidential and maintain privacy as directed by the Supreme Court in the Justice K.S. Puttasamy v. UoI (Aadhaar judgment) case.
In addition to SBI and PNB and four private banks – HDFC Bank, Axis Bank, ICICI Bank, and Yes Bank – said in a joint petition that the RBI, as banker to the government and banking regulator, receives and holds a lot of sensitive information, the disclosure of which may not be in the national interest or serve the public interest. Senior attorney Mukul Rohtagi, representing HDFC Bank, contended that the bank was not a party when the prior decision requiring disclosure was issued. “Today's petitions are distinct, and there is no need for Justice Rao's bench to hear them,” he said, arguing against attorney Prashant Bhushan, who was representing the RTI activist, who argued that the original Bench should only hear these petitions.
Rohtagi, along with senior lawyer K.V. Vishwanathan and Solicitor General Tushar Mehta (posing for SBI), argued that the case should be heard by a bigger bench since client privacy is critical to a bank that has "guarded business secrets." The publication of inspection reports has been characterised as a violation of the privacy of banks, their clients, and their staff. According to Rohtagi, the RTI Act does not apply to private entities like them since they are not public authorities under the Act, and hence information related to such institutions and their clients, much alone confidential/sensitive information of such banks/FIs, cannot be requested under the RTI Act. “No bank client wants to have his safeguards/parameters revealed to anybody. These RBI-prepared inspections are kept strictly private. Banking is a business based on faith and trust. It has millions of accounts; the entire banking fabric will be completed if all inspection reports are made public. Furthermore, private bank shares are traded, and they are not established by legislation, therefore they are not covered by the RTI Act,” he said.
Reading from a Union Bank of India risk assessment report, Bhushan informed the Bench that "these inspection reports simply offer information of the bank's operations, including monitoring of its lending, practises to check defaulters like Vijaya Mallya and Mehul Chokshi." The entire paper is devoid of any client names. This report contains no sensitive information.” He further stated that the verdict was issued only after all of the banks were heard through the Indian Banking Association (IBA).
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