Right to Information from Banks

Right to Information is much debated in different platforms on the ground what needs to be disclosed. The article looks into it in light of the recent judgment of the Supreme Court on the issue of information sought from banks.

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The Right to Information has been interpreted by the Supreme Court to be a part of fundamental rights guaranteed under Article 19(1) of the Constitution of India, which states that every citizen has the right to freedom of speech and expression. After the passing of the Right to Information Act, 2005 (“Act”), this right is now also a legal right granted by the statute. Right to information includes the right to inspect works, documents and records. It also includes the right to take notes, extracts or certified copies of documents or records and even take certified samples of the material. It even includes the right to obtain information in form of printouts, disks, floppies, tapes, and videocassettes or in any other electronic mode. The Act extends to the whole of India except the State of Jammu and Kashmir.

Information means any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force. Public authority means any authority, body or institution of government established by or under the Constitution; by any other law made by Parliament or the State Legislature or by notification issued by the appropriate Government. It also includes a body, which is owned, controlled or substantially financed including any NGO, which is even financially supported by the Government. Private bodies like companies and firms are not covered by the Act. But any organization, which is owned, controlled or substantially financed by the Government, is covered under the purview of this Act.

The requested information can be denied on 10 grounds i.e. concerning sovereignty and integrity of India, expressly forbidden by Court or Tribunal, concerning breach of privilege of Parliament or Assembly, trade or commerce secrets and intellectual property, information given in fiduciary relationship, information given by foreign Government, leads to endanger life or physical safety of any person, impedes investigation, cabinet papers and personal information warranting unwanted invasion of privacy. The article discusses the right to information and its denial in the context of such information sought from banks including RBI.

A. Issues

Of recently, an important issue came under deliberation in bunch of transferred cases before the Hon’ble Supreme Court Reserve Bank of India vs. Jayantilal N. Mistry[1]. In this matter, the following issues came up:

(a) Whether all the information sought under Right to Information Act, 2005 (“Act”) from banks can be denied by Reserve Bank of India (“RBI”) and other banks on the ground of economic interest, commercial confidence and fiduciary relationship with other banks on one hand and public interest on the other.

(b) If this information cannot be denied then to what extent the information can be provided.

(c) Whether the Act can override various provisions of special statutes, which confer confidentiality of information to the RBI?

The article looks into the various aspects of the judgment.

B. Discussion from the Proceedings

Since, the matter was pending before different High Courts in the nature of writ, therefore a transfer petition was filed before the Supreme Court for hearing all the petition, which was allowed. The RBI has taken a stand that in the petitions concerning it, the information sought under it is exempted under Section 8 (1) (a) (d) and (e) of the Act. Since Section 8 of the Act is relevant to the matter, the same is reproduced here with suitable interpretations.

(a)   Exemption from disclosure of information: Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen:

  • (i) Information Sensitive to State: Information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence;
  • Expressly Forbidden: Information which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court;
  • Breach of Privilege: Information, the disclosure of which would cause a breach of privilege of Parliament or the State Legislature;
  • Information on IPR, Trade Secrets and Commercial Nature: Information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;
  • Information under Fiduciary Relationship: Information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;
  • Information from Foreign Government: Information received in confidence from foreign government;
  • Information Endangering Life: Information, the disclosure of which would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes;
  • Information impeding Investigation: Information which would impede the process of investigation or apprehension or prosecution of offenders;
  • Information on Excluded Documents: cabinet papers including records of deliberations of the Council of Ministers, Secretaries and other officers: Provided that the decisions of Council of Ministers, the reasons thereof, and the material on the basis of which the decisions were taken shall be made public after the decision has been taken, and the matter is complete, or over: Provided further that those matters which come under the exemptions specified in this section shall not be disclosed;
  • (x) Unrelated Information: Information which relates to personal information the disclosure of which has not relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or the State Public Information Officer or the appellate authority, as the case may be, is satisfied that the larger public interest justifies the disclosure of such information: Provided that the information, which cannot be denied to the Parliament or a State Legislature shall not be denied to any person.
  • Information in Public Interest: Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub‑section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests.
  • Information on event Twenty Years before: Subject to the provisions of clauses (a), (c) and (i) of sub‑section (1) of Section 8 of the Act, any information relating to any occurrence, event or matter which has taken place, occurred or happened twenty years before the date on which any request is made under section 6 shall be provided to any person making a request under that section: Provided that where any question arises as to the date from which the said period of twenty years has to be computed, the decision of the Central Government shall be final, subject to the usual appeals provided for in this Act.

(b) Rights and Immunities to access to Information from Banks by RBI: Under the Banking Regulation Act, 1949 the RBI has right to information from banks under Section 27 and the body also has discretionary right to publish the same in consolidated form as it deem fit. Under Section 34A of the aforesaid Act, the production of documents of confidential nature cannot be compelled. Under Section 35 of the Banking Regulation Act, 1949 the RBI can inspect any bank but the publication of the report would be strictly as per orders of the Central Government and the same, if necessary. Credit information of a bank is also a confidential information (Section 45 of the RBI Act, 1934) and section 45(3) of the RBI Act give further immunity of non-disclosure before any legal body as well.

(c)  Information from Credit Information Companies: The Credit Information Companies (Regulation) Act, 2005 states that any credit information cannot be disclosed, privacy principles to be adopted, no unauthorized access to such information. This information was brought into force after the Act came. This is clear indication that RTI Act cannot override any credit information sought under different Acts. Similar confidentiality provisions exist under the various Acts regulating banks.

C. Outcome of Proceeding

The Preamble of the RTI Act itself recognizes harmonizes the information in conflict with public interest. RTI Act does not give any new right but provides the machinery to effectuate the existing right. Modern societies are information societies. An application for seeking information should be made to an officer of the public authority who is designated as Central Public Information Officer (CPIO). All the public authorities have designated their Central Public Information Officers and have posted their particulars on their respective websites. This information is also available on the RTI website (www.rti.gov.in).

The judgment finds reference to the term ‘fiduciary relationship’ as the same has been ground for refusal of information under these cases. As per Law Lexicon, the term means where one person is under the duty to act for the benefit of the other on the matters within the scope of fiduciary relationship. Fiduciary relationship arises in four situations:

(i) When one-person places trust in faithful integrity of another who as a result gains superiority or influence over the first.

(ii) When one person controls and assumes responsibility over another.

(iii)When one person has duty to advise or act within the scope of the  relationship

(iv) When there are specific relationship traditionally requiring fiduciary duties such as lawyer and client; stock broker and customer.

The scope of fiduciary relationship involves the following rules:

(i)No Conflict Rule: The fiduciary must not place himself in position where his own interest is in conflict with that of customer or beneficiary. There must be real sensible possibility of conflict. There must be real sensible possibility of conflict.

(ii)No Profit Rule: The fiduciary must not place himself in position of profit at the cost of beneficiary or customer.

(iii)Undivided Loyalty Rule: is owed by the fiduciary to the beneficiary. A consequence to this is that fiduciary must make available the information sought that is relevant to the customers.

(v) Duty of Confidentiality: Under this, the fiduciary must not use information to his own advantage or for benefit of another person.

The term fiduciary relationship was discussed at length by Supreme Court in Central Board of Secondary Education vs. Aditya Bandhopadhya & Ors.[2]


The appeal filed by the banks were dismissed with following conclusions:

  • The court found that RBI in the instant cases is not acting in fiduciary relationship with any of the banks and by putting a statutory duty in garb of the fiduciary relationship the regulatory authorities have created intentionally or unintentionally in terrorem effect (a legal threat).
  • RBI is supposed to uphold the interest of the public and not of individual banks. RBI has no legal duty to maximize the benefit of individual banks and hence in view of above it is duty bound to comply with RTI Act. RBI’s argument that if people who are sovereign are empowered with information of banking irregularities the same can pose economic threat is baseless.
  • The information required under mandate of law cannot be retained under the veil of fiduciary relationship.
  • Financial implications are under the obligation to share all information to the RBI but the latter is under no garb of fiduciary relationship to conceal the same under the defence. The fiduciary relationship is characterized by trust and confidence and the Statutory duty between bank and RBI lacks the character.
  • Section 2(f) of the RTI Act clearly provides that the inspection reports and the documents fall under the purview of the ‘Information’, which is obtained by public authority from the private body. RBI is liable to provide such information to the public as the same is in spirit of law.
  • RBI as a watchdog should involve in disclosing information to general public subject to the RTI Act.
  • The free flow of information paves way for open governance, which is foundation of democracy.
  • Lower level economic information like contracts, departmental budgets should not be held under this exemption.

[1] Civil Appeal No. 91 of 2015; The other appeal before court on the same issue is Civil Appeal No. 92 to 99 of 2015.

[2] (2011) 8 SCC 497

Non-Performing Assets

Banking sector is important backbone for our economy. A banker has to be very cautious in lending, because bank is not lending money out of his own capital.

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Banking sector is important backbone for our economy. A banker has to be very cautious in lending, because bank is not lending money out of his own capital. A major portion of the money lent comes from the deposits received from the public and government share. If an advance where payment of interest or repayment of instalment of principal (in case of term loans) or both remains unpaid for a certain period, then it is a serious concern for bank at micrscopic level and economy at macroscopic level. At present, high levels of Non Performing Assets (“NPA”) in the banking sector is an issue of worry and its constant increase is a matter of serious economic concern. The article analyses the legal interpretation of the same.


As per RBI [1], An asset becomes non-performing when it ceases to generate income for the bank. Earlier an asset was considered as NPA based on the concept of ‘Past Due’. A NPA was defined as credit in respect of which interest and/ or installment of principal has remained ‘past due’ for a specific period of time. The specific period was reduced in a phased manner as under:

Year ended March, 31  Specific period
1993 4 quarters
1994 3 quarters
1995 2 quarters

An amount is considered as past due, when it remains outstanding for 30 days beyond the due date. However, with effect from March 31, 2001 the ‘past due’ concept has been dispensed with and the period is reckoned from the due date of payment.

As such, with effect from March 31, 2004, a non-performing asset shall be a loan or an advance where:

(i) Interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a Term Loan.

(ii) The account remains ‘Out of order’ for a period of more than 90 days, in respect of an Overdraft/ Cash Credit (OD/CC).

(iii) The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,

(iv) The installment of principal or interest thereon remains overdue for two crop seasons for short duration crops,

(v) The installment of principal or interest thereon remains overdue for one crop season for long duration crops,

(vi) The amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitization transaction undertaken in terms of guidelines on securitization dated February 1, 2006.

(vii) In respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment.

B. Judgment

Dismissing appeals filed by around 60 companies, the Supreme Court upheld the amendment to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 (“Sarfesi Act”)that gave power to every financial institution to decide a period after which a bad loan can be declared as a non-performing asset (NPA) in the judgment titled Keshavlal Khemchand & sons Pvt. Ltd. & Ors vs. Union of India[2]. Challenging the Gujarat HC’s April order that termed the decision of Parliament to take away the power from RBI as wrong, the promoters and companies had alleged that its prudential norms defy the right to equality under Article 14 of the Constitution of India. The promoters of around 60 companies had moved the Supreme Court questioning every financial institutions power to decide its own NPA period, saying it is a violation of right to equality. They had also challenged the RBI’s competence to regulate all banking and NBFCs in this regard. A bench headed by Justice J Chelameswar, while dismissing the appeals, asked the distressed companies to pay 1% of their loan outstanding amount to the lenders as costs.

Before the 2004 amendment to the Sarfaesi Act, RBI was the regulator for the banking, non-banking and securitisation institutions for deciding the period after which loans could be treated as NPA. Till 2004, RBI had set the NPA period for banks at 90 days and at 180 days for NBFCs. Power Finance Corporation has a six-month period to classify an asset as an NPA. Besides, there are a few other institutions like Exim Bank, National Housing Bank under NHB Act, Nabard, Rural Electrification Corporation and Indian Railway Finance Corporation who are governed by their own regulations.

Sarfaesi Act gives powers to seize and desist to the banks under which the banks need to send a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. In case the borrower fails to comply with the notice, the bank can take either take possession of the security for the loan, sell or lease or assign the right over the security or appoint any person to manage the same.


Bankers would find the above ruling as the positive one especially when recovery of money through courts by creditors takes longer duration. The defaulting companies will have lesser loopholes to escape now.

[1] Master Circular of RBI on Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances dated July 1, 2014.
[2] Writ Petition of 901 of 2014.