Dinesh Kamath's Editorial 'RBI should be transparent' that was published in Newsband

RBI should be transparent

The Supreme Court’s two-judge bench directed the RBI to furnish all information relating to inspection reports and other material sought by Right to Information (RTI) petitioners. The bench made it clear that “any further violation shall be viewed seriously”.  

There were multiple requests made to RBI seeking information ranging from the names of wilful defaulters on bank loans worth hundreds of crores of rupees. The central bank’s “defiance” of Supreme Court orders on disclosing the names of wilful loan defaulters can make the bank fall in trouble. It is inexcusable that the RBI continues to keep the largest lenders to banks, the depositors, and the public in the dark on the specific loan accounts that are endangering the banking system’s health and viability. The central bank’s intransigence and repeated failure to honour the court’s orders has provoked the judges.  

Potential exists that hasty disclosure of information (forced by courts etc) can lead to a run on the banks & melt the rupee. A mature process has to be designed for disclosure of default information (wilful & otherwise) to protect National interests. GOI must divest from Banking & other businesses & focus on Minimum Government Maximal Governance with a Supervisory Regulatory Legislative role & providing for independent tariff frameworks for monopoly services providers. Banks have processes now to handle wilful defaulters & such processes may be improved e.g. 3^rd party accounting , 4^th party auditing , stress tests , separation of ownership & management for large loan exposures, risk checks by a 5^th auditor, whistle blower protection etc. Courts & RBI must take Netajis & Babujis out of banking & leave it to professionals.

The Supreme Court has given the RBI a ‘last opportunity’ to provide details under the Right to Information Act of the top 100 defaulters. The Congress accused the government of influencing the RBI to withhold the defaulters’ list and audit reports on the co-operative institutions in Gujarat. Under this regime, non-performing assets (NPAs) of scheduled commercial banks rose from 2.5 lakh crore to 10.36 lakh crore from March 2014 to March 2018, that is five times in four years, says the Congress. “The RBI was working on the directions of the government. Mr. Modi wants to protect his capitalist friends,” adds Congress.

 “Why is the RBI not disclosing these details? Why is the government of India not giving a directive to the RBI to disclose the same. Is it because Modi has much to hide? Nobody is asking for the defaulters to be sent to jail but the applicant is only asking for names,” concluded the Congress spokesperson.