It was rather surprising that the Supreme Court chief justice T S Thakur told the court on 12th April that his bench would examine if the total amount of defaults in repayment of bank loans running into lakhs of crores of rupees should be made public, without disclosing the defaulters name.
He said: “There is no confidentiality in figures, but the names may be kept out.”
Justice Thakur made this observation when the RBI counsel stoutly resisted the court’s earlier stance to name and shame the big defaulters (each of whom has borrowed more than Rs 500 crore from different banks and has refused to pay back. And there are thousands of such defaulters).
Pray, Justice Thakur, why should you consider only disclosing the figures (total amount of the taxpayer’s money swindled in this bank scam) and not the names of the white-collar criminals who are responsible for this crime? Why should you allow the dubious plea of the RBI to withhold the disclosure of the names of those who have borrowed money from banks to the tune of thousands of crores to set up business in India but bought properties abroad with that money?
That the RBI’s plea is dubious has been conclusively established by a division bench of the Supreme Court barely four months ago. The RBI had then challenged the order of the Chief Information Commission (CIC) which had ruled that the RBI was duty-bound to disclose information about the Non-Performing Assets (NPAs) of the commercial banks under the RTI Act. The CIC had said that the exemptions from the disclosure of the information provided under the RTI act could not be applied to the banking sector.
Raghuram Rajan, the RBI governor, had challenged the CIC order in the Supreme Court. A Supreme Court bench consisting of Justice M Y Iqbal and Justice C Nagappan heard the matter. The RBI chief, through his counsel, placed two arguments: first, that the the central bank had a fiduciary relationship with the borrowers and therefore, under the RBI law, it was bound by the confidentiality clause and could not reveal the names of the defaulters. And the second argument was the following: “Disclosure of information would have adverse impact in the public confidence in the bank. This has serious implications for financial stability… This will also affect the economic interest of the state.”
After a careful consideration of all facts, the SC bench observed on December 16, 2015 that the RBI could not hide ‘routine information’ such as the names of top defaulters, the extent of losses suffered by banks and details of actions taken against banks from the public.
Justice Iqbal-led bench trashed the ‘fiduciary relationship’ argument advanced by the RBI chief. The Court said: ‘the RBI does not place itself in a fiduciary relationship with the financial institutions because the reports of inspections, statements of banks and information related to business obtained by the RBI are not under the pretext of confidence or trust’.
The Justice Iqbal bench also came down heavily against the second argument of the RBI. It said: ‘the RBI’s contention that revealing the information to the public would harm public interest was absurd’. It went on to say: ‘the facts reveal that banks are trying to cover up their underhand actions. Therefore, they are even more liable to be subjected to the public scrutiny’. This attitude of the RBI (hiding the information on banking activities from the public) will only attract more suspicion and disbelief in them, the court said.
The apex court bench’s final indictment of the RBI was lethal: “We have surmised that many financial institutions have resorted to such acts which are neither clean nor transparent. The RBI in association with them has been trying to cover up their acts from public scrutiny.”
The RBI has been shown up for what it is -- that it is complicit in shielding the corrupt lenders and the fraudulent borrowers which has led to the siphoning off of ‘lakhs of crores’ of public money. This indictment has been made by none other than a Supreme Court bench in a detailed judgement, not in an off-the-cuff remark. And this indictment came only in last December.
Just four months have passed since then; in another public interest litigation that has come up before the apex court demanding the disclosure of the information about the big defaulters (incidentally, in both the cases the counsel for the petitioner has been the intrepid lawyer, Prashant Bhushan), the RBI governor is making the same old argument – that of fiduciary relationship and financial stability – to make the case once again for concealment of the information from the public.
As this argument has been decisively rejected by the apex court just four months ago, Raghuram Rajan’s same old dubious plea should not be allowed to eat into the honourable chief justice’s highly valuable judicial time. When the case comes up for discussion on April 26, Raghuram Rajan and his cohorts should be told in no uncertain terms that the RBI’s shenanigans cannot be kept under wraps.
The Justice Iqbal bench had wisely observed that if people remained oblivious to the irregularities committed by the commercial banks and their regulator, the RBI, then the whole financial system of the country would be rigged and sooner or later it would lead to serious consequences for the Indian economy.
When that happens, Raghuram Rajan would be gone pursuing another high-flying international career, leaving a billion Indians bruised. Of course, some Indians (the likes of Vijay Mallyas who would flee the country when the situation gets too overheated for them to stay in India) would remain eternally grateful to him. These white-collar criminals would seek Rajan out when he travels to various international financial capitals and express their gratitude to him for shielding them from the public eye for as long as he held office.
Chief Justice T S Thakur must save the fellow countrymen from such sharks out to devour India when he takes up the matter on April 26.