As banks battle a loan crisis, they are also blocking more RTI pleas than most government bodies

India’s public-sector banks are rejecting more right to information applications than other Central government bodies, shows an analysis of data maintained by the Central Information Commission. The Commission is the apex body that monitors the implementation of the Right to Information Act, 2005, which mandates timely response to citizens’ requests for information from public authorities under the Central and state governments.

This comes at a time when banks are dealing with a crisis of bad loans and loan fraud.

The analysis was done by the Access to Information Programme at the non-profit Commonwealth Human Rights Initiative in New Delhi. The data shows that 86,683 applications were filed in 2016-2017 seeking information from the country’s 25 public-sector banks and the Reserve Bank of India. And that banks denied information in 24,175, or 28%, cases.

While the applications filed to banks constitute only 9% of all applications filed to Central government bodies, the applications rejected by banks make up 33% of all applications rejected by Central authorities.

According to the Commonwealth Human Rights Initiative, banks rejected a major chunk of the applications without giving valid reasons for denial of information, which are permissible under the transparency law.

“Resistance to transparency in the banks seems to have increased during this period, particularly when the banking sector is going through a difficult phase,” said Venkatesh Nayak of the Access to Information Programme.

The banking crisis

In recent months, questions have been raised about the functioning of both public and private banks in India. In February, the Punjab National Bank, the country’s second-largest public-sector lender, said it had detected fraudulent transactions worth Rs 11,400 crore involving diamond merchant Nirav Modi at one of its branches. An investigation into a corporate loan extended by ICICI Bank that called into question the role of its chief executive officer Chanda Kochhar, and Axis Bank chief executive officer Shikha Sharma shortening her tenure amid reports that the Reserve Bank was unhappy with the lender’s performance added to the crisis in the banking sector.

Then there is the problem of galloping non-performing assets, or loans where the borrower has failed to repay the interest and/or the principal amount for at least 90 days. In December, the gross non-performing assets of Indian banks jumped to Rs 8.9 lakh crore after staying under Rs 1 lakh crore between 2006 and 2011. Public banks account for Rs 7.8 lakh crore of these bad loans.

The bigger the proportion of non-performing assets in the total lending of a bank, the unhealthier its finances. That is because banks are expected to set aside a share of their profits to offset likely losses from such loans. Several banks have also been accused of or admitted to underreporting non-performing assets.

RTI and public-sector banks

The Right to Information Act is not applicable to private banks. But it requires public-sector lenders to share information with citizens. Only in special cases – for instance, when the information could harm the privacy of individuals, financial and defence secrets, trust-based relationships or privilege of Parliament – can government authorities deny information. These exemptions are specified in the Act itself. The law also says that except for these exemptions, no other legal provision can be used to deny information.

However, transparency activists have pointed out that banks have illegally used the provisions of other laws such as the RBI Act and the Banking Regulation Act to deny information to right to information applicants.

High rejection rates

According to the analysis, the State Bank of Hyderabad rejected 71% – or seven out of every 10 – right to information applications it received in 2016-2017. It said this was the highest rate of rejection reported by any public authority in the country covered by the 2005 Act. The Oriental Bank of Commerce rejected every second application (50%) and the Corporation Bank denied information in 47.3% of the cases. The Punjab National Bank rejected three out of every 10 applications it received in that period.

Banks that reported lower rejection rates were the State Bank of Patiala and United Bank of India with 13.5% each and the Indian Bank with 11.7%.

The Reserve Bank, which acts as a banking regulator among other things, had the lowest rejection rate of 2.5%. But this was almost double its figure of 1.3% for 2015-2016. “Perhaps the refusal to open up records relating to the demonetisation exercise, printing of new currency notes and their circulation to treasury chests situated across the country have added to these numbers,” said Venkatesh Nayak.

Including the Central bank, 13 public-sector banks rejected more applications in 2016-2017 than in 2015-2016, the analysis found. On the other hand, the remaining 13 reported a decrease in rejection rates.

Invalid reasons

Of the 24,175 applications that were rejected, valid reasons for denial of information specified in the Right to Information Act were not cited in 28% of the cases. The Central Information Commission’s data shows that banks simply marked “others” as the reason for rejecting these applications.

Among the legally permissible exemptions, the banks used the provision for protecting the privacy and personal information of individuals in 27.4% of the cases, followed by the provision for protecting commercial and trade secrets in 17.4% of the cases. The Reserve Bank cited “others” as its reason for denying information in more than half of the applications it rejected.

“Despite the CIC reportedly moving to delete ‘others’ category from the RTI statistics reporting software, the banks are still using this category for reporting,” said Nayak. “As to what criteria covers the ‘others’ category, remains. This needs further research to understand how banks are rejecting these huge number of applications.”