India's Central Bank Ordered to Disclose Critical Reports
India’s top court directed the central bank to disclose its inspection reports on lenders to allow people to gauge their health.
The order was the “last opportunity” to avoid initiation of contempt proceedings against Reserve Bank of India Governor Shaktikanta Das, a two-judge bench of the Supreme Court headed by Justice L.N. Rao ruled Friday. The central bank will comply with the order, the RBI’s lawyer informed the court.
The decision is a boost for transparency in central bank’s functioning and banking sector in India, which has the highest stressed-asset ratio among the world’s major economies. The central bank will have to make public the reports, which according to the RBI contain critical information such as risk of failure and other financial details that “may result in unwarranted panic” or even a run on the bank.
Individuals and activists had sought the annual inspection reports for ICICI Bank Ltd., Axis Bank Ltd., HDFC Bank Ltd. and State Bank of India under the right to information law. A person is not obliged to give a reason for seeking information from a government body while seeking any information under the law. Activists had also sought the list of loan defaulters from the central bank.
The top court had in 2015 held that the central bank would have to disclose the information, saying it had to act in public interest.
The central bank subsequently put in place a “disclosure policy” stating that such information cannot be shared, prompting petitioners and activists to seek contempt of court action against the central bank’s governor. In Friday’s verdict, the court ordered the RBI to withdraw the policy.
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