Loans to corporate entities: Are public sector banks evading the RTI Act?

At a time when the banks are staring at Rs 9.5 lakh-crore worth of gross non-performing assets (NPAs), an RTI query into how much money the corporate entities owe to the public sector banks in the country has elicited a muffled response from majority of PSU lenders.

The RTI query, sent to the Ministry of Finance, sought details on individual exposure of various PSBs to corporate borrowers. The RTI had questions on the money loaned to big industrial houses by government-run banks. 

However, all public sector banks except Andhra Bank and Allahabad Bank have refused to divulge information citing either the 'personal nature' of questions or how they don't fit under the provisions of the RTI Act.
 
RBI has listed a number of reasons to refuse information under the RTI Act. The regulator says that the information can be denied on the pretext of a fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information.

In December 2015, in a landmark judgement, the Supreme Court reprimanded the Reserve Bank of India (RBI) for trying to cover up the acts of state-run lenders from public scrutiny.

"RBI is supposed to uphold public interest and not the interest of individual banks. We have surmised that many financial institutions have resorted to such acts which are neither clean nor transparent," the apex court bench had said.

The court added that the RBI and banks have sidestepped the general public's demand to give the requisite information on the pretext of "fiduciary relationship" and "economic interest". "This attitude of the RBI will only attract more suspicion and disbelief in them. RBI as a regulatory authority should work to make the banks accountable to their actions."

The Supreme Court had junked the pleas filed by the RBI against various orders passed by the Central Information Commission and high courts over disclosure of information relating to banks.

Interestingly, even after the SC judgement, some public sector banks have again resorted to the same legalese for which the apex court had reproached the RBI. In their reply to the RTI query, the banks have said that the information available with banks under "fiduciary relationship" is exempted from disclosure.

While Andhra Bank and Allahabad Bank have disclosed the loans given to big corporates, all other lenders refused to do so.

PSBs dodging RTI queries is nothing new. But this comes at a time when public sector banks are reeling under loan defaults and bank frauds. Earlier this month, Finance Minister Arun Jaitley informed the Rajya Sabha that loans worth Rs 81,683 crore were written-off by public sector banks (PSBs) in 2016-17.

The questions that were asked in the RTI query sought information on the loans given to the Reliance Industries, Adani Group, GVK Group, GMR and Jaypee Group. The RTI was first directed to the Finance Ministry, which then forwarded the RTI request to various banks asking them to provide the information.

Banks which did not disclose any detail in their reply to the RTI query include State Bank of India (SBI), Bank of Maharashtra, Corporation Bank, Indian Bank, Canara Bank, UCO Bank, Indian Overseas Bank, Central Bank of India, Bank of India and Syndicate Bank.

Country's largest public sector lender, the SBI, said, "The information sought by you under point number three to eight is the third party personal information held by the bank in fiduciary capacity, the disclosure of which is not warranted for any larger public interest and as such is exempted from disclosure."

However, the response given by Allahabad bank and Andhra bank question the stand taken by other PSBs. Andhra Bank said the total liabilities of different industrial groups as on December 2017 was Rs 56098.33 crore.

The bank further said that its outstanding liability to Mukesh Ambani-led Reliance Industries as on December 2017 was Rs 1538 crore.

Allahabad Bank said that its exposure to Gautam Adani-led Adani Group stands at Rs 875.43 crore. Adani Group's outstanding liability with the Andhra Bank was at Rs 569.14 crore as on December 2017.

Andhra Bank said its outstanding liability with the Jaypee Group was Rs 603.66 crore. Allahabad Bank's exposure to the group is at 252.76 crore.

In the case of infrastructural major GMR, Andhra Bank's outstanding liability was Rs 1188.59 crore while Allahabad Bank's exposure to the group was at Rs 307.09 crore.