Of late, the banking sector in India has been in the news for all the wrong reasons, be it demonetisation, rising non-performing assets (NPAs) or bad loans, the Punjab National Bank fraud, loan waivers and now reports of poor recovery rates and currency shortage in ATMs. Amidst all this, there is a rising chorus for privatisation, citing governance issues and RTI “constraints”.

However, figures cited by the CIC tell a different story on the manner in which public sector banks (PSBs) are treating RTI applications. In 2016-17, PSBs, including the Reserve Bank of India, accounted for 33% of total rejections by all government bodies put together, according to a study by the Commonwealth Human Rights Initiative (CHRI) of the Central Information Commission’s (CIC) annual report for 2016-17, released last month.

“In other words, the rate of rejection of RTI applications was much higher as compared to other public authorities under the Government of India. Resistance to transparency seems to have increased during this period, particularly when the banking sector is going through a difficult phase,” said the CHRI report.

According to the finance ministry, 25 PSBs and their regulator, the RBI accounted for more than half of the RTI applications (57.33%) received by it. The overall number of RTI applications reported by the ministry remains in the range of 1.5 lakh (151,186) in 2016-17, which means more people sought information from banks as compared to other public authorities under the finance ministry. In 2015-16, PSBs accounted for less than half (48%) of the RTI applications that the Ministry reported.

Among banks, the State Bank of Hyderabad rejected a record 71% or seven out of 10 RTI applications received in 2016-17, while the Oriental Bank of Commerce rejected every second application (50% rejection rate). Corporation Bank’s rejection rate was 47.3% while Andhra Bank rejected 45.9% of RTI applications received in 2016-17. Both Dena Bank and Canara Bank rejected more than 40% of the RTI applications received during this period.

Punjab National Bank, which has been in the news for a fraud related to issuance of more than $1.8 billion letters of undertaking (LoU) allegedly committed in collusion with certain business, rejected almost three of every 10 RTI applications received in 2016.

Decline in RTI applications

Overall, the 25 PSBs received more than 73,000 RTI applications in 2016-17, a dip of almost 4% (3.92%) over the previous year. However, the Central Bank which receives between 3,000-3,500 RTI applications per year did not submit its statistics to the CIC in 2016-17, a lapse which may explain the decline.

Banking regulator RBI reported receiving more than 13,000 RTI applications in 2016-17, an increase of more than 14% over the previous year.

Manner of rejection questionable

That a large number of PSBs and RBI rejected more RTI applications under “Others” category instead of the legally permissible exemptions to disclosure provided under Sections 8, 9 11 and 24 of the RTI Act. As to what criteria covers “Others” category, remains a mystery, says the report.

“While PSBs rejected 6,625 RTI applications under “Others” category, only 6,616 RTI applications were rejected under Section 8(1)(j) relating to personal information and the protection available for privacy- the most frequently invoked of legally permissible exemptions. RBI also rejected more than half (57%) of the RTI applications it received in 2016-17 under “Others” category,” show the findings of CHRI’s report.

An important question that must be also asked is how and why PSBs are receiving information from foreign governments in the course of their routine business. This is because nine nine PSBs invoked section 8(1)(f) of the RTI Act to reject 164 RTI applications in 2016. Section 8(1)(f) exempts information that is received in confidence from a foreign government. Interestingly, RBI did not employ section 8(1)(f) to reject any RTI application in 2016-17, nor did any of the remaining 16 PSBs.

In fact, all 25 PSBs and RBI invoked section 8(1)(e) of the RTI Act to reject between six to more than 900 RTI applications. State Bank of India invoked this section to reject 902 RTI applications – almost three times more than Syndicate Bank and Canara Bank which rejected more than 380 applications each.

Section 8(1)(e) of the RTI Act exempts information that is available to a person in his fiduciary relationship, which are trust-based,such as those between a doctor and a patient, a lawyer and a client.

RTI versus NPAs

In 2016-17, both the number of RTI applications and the volume of net NPAs increased in 11 PSBs. These are: Andhra Bank (3.67% : 71.56%), Bank of Maharashtra (3.99% : 62.29%), Canara Bank (36.56% : 3.92%), Corporation Bank (34.93% : 27.64%), Dena Bank (2.19% : 47.88%), IDBI Bank Ltd. (1.63% : 72.13%), Indian Bank (7.65% : 3.45%) Indian Overseas Bank (5.71% : 2.79%), State Bank of Bikaner and Jaipur (3.14% : 240.60%), Syndicate Bank (17.94% : 15.49%) and United Bank of India (608.89% : 7.87%).

“However, it is difficult to make out any positive correlation in the absence of clues about the nature of information sought. So this could only be a fictive correlation thrown up by the juxtaposition of two sets of statistics,” the report said.

The study comes at a time when the banking sector in India is going through a “crisis phase. Bad loans or “non-performing assets” (NPAs) have risen to unprecedented levels in 2018. According to the statistics that the Union minister of state for finance, tabled in the Lok Sabha on April 6, 2018, NPAs in gross numbers (pun intended) stood at Rs 6.89 lakh (more than $150 billion) crores at the end of June 2017.

There is speculation in the media that this figure might have reached Rs 9 lakh crore by now. The banking sector was saddled with Rs 2.67 lakh crore worth of gross NPAs at the end of the fiscal year 2014-15 – almost a year after the National Democratic Alliance took over the reins of government. More recent reports indicate that the rate of recovery of written off bad loans has also been extremely poor during the last four years.

Meanwhile, some economists are calling for the privatisation of public sector banks to improve their governance and functioning. The recommendations of the PJ Nayak Committee, which reviewed the governance of boards of banks — both public and private in India — submitted to the CIC are being dusted and dished out to the public in support of these demands.

This committee identified the application of The Right to Information Act, 2005 to all PSBs as a “major constraint” affecting their governance amongst others. No statistics or anecdotal information was, however, furnished in support of this finding.

However, as the CHRI report clearly shows citing CIC figures, there is no evidence of any undue burden on PSBs as the average load factor on each branch of a PSB was less than two RTI applications a year.

There is, therefore, need for the CIC to urgently launch a third party audit of banks receiving the most number of RTI applications as well as those reporting a very high proportion of rejections in order to make an assessment of the manner in which banks are disposing RTI applications. In the matter of Reserve Bank of India vs Jayantilal N Mistry and related cases, the Supreme Court had directed the RBI to disclose information about NPAs to RTI applicants. Whether the court’s directives are being complied with or not can be ascertained only by examining the RTI applications and the responses of each bank. So a third party audit under the aegis of the CIC is the need of the hour.

Venkatesh Nayak is programme coordinator, access to information, Commonwealth Human Rights Initiative, an independent NGO based in Delhi.

Read the full report here.