Information commission in quandary over notice to central bank governor
RBI chief asked to explain why he should not be penalized for keeping list of biggest defaulters secret
A show cause notice to the governor of India’s central bank and to the Prime Minister’s Office has pushed the Narendra Modi government on to a sticky wicket. The notice was issued on November 2 by the Central Information Commission (CIC), which is the final appellate authority for all matters pertaining to India’s Right to Information Act, the key transparency law that was passed in 2005.
Asia Times has learned that the chief information commissioner, R K Mathur, has called an urgent meeting of the CIC for Tuesday morning to discuss the order related to the central bank and the Prime Minister’s Office.
The notice was issued after Information Commissioner M Sridhar Acharyulu heard a case relating to the federal Ministry of Labor and Employment. However, the petitioner, who had sought information from the ministry, also wanted information about the top non-performing assets (NPAs) – debts owed by those declared “willful defaulters.”
India had NPAs worth 9.5 trillion rupees according to September 2017 estimates, a figure that could have gone up to 11 trillion rupees (US$151 billion) as per some estimates. The Financial Stability Report, 2017, released by the RBI states that India’s gross NPAs stand at 9.6%. Strangely enough, the names of these top willful defaulters have never been officially revealed, and the RBI has consistently cited secrecy, arguing that any information received in a fiduciary capacity can be exempted from disclosure.
A veil of secrecy
India’s transparency law, which was passed by Parliament in 2005, clearly states that information has to be shared with Indian citizens who apply for access to records under the Right to Information Act. However, information can be denied under Section 8 of the act. This includes grounds such as national security, relations with foreign governments, or sensitive economic issues. The RBI has steadfastly refused to release the list of defaulters.
The growing NPAs had also become a source of tension between the government of Prime Minister Narendra Modi and the previous RBI governor, Raghuram Rajan. On February 5, 2015, Rajan wrote a detailed letter to the Prime Minister’s Office detailing willful defaulters and his concerns about them. This letter, along with the list of willful defaulters, has been kept secret.
While hearing the appeal by the petitioner, Acharyulu, the information commissioner, noted that besides the RBI, the Prime Minister’s Office and the federal Finance Ministry were also hiding information that should be in the public domain
While hearing the appeal by the petitioner, Acharyulu, the information commissioner, noted that besides the RBI, the Prime Minister’s Office and the federal Finance Ministry were also hiding information that should be in the public domain. It is a matter of record that Rajan, a much-respected economist, was appointed by the previous Congress-led government. After Modi came to power in 2014, tensions between the government and Rajan continued to escalate, and he finally decided not to seek a second term. In his place, the government brought in Urjit Patel as the next governor of the RBI.
However, several high-profile defaulters managed to slip out of India, causing tremendous embarrassment to the Modi government. Liquor baron Vijay Mallaya and diamond merchants Nirav Modi and Mehul Choksi managed to leave the country despite owing billions of rupees to several public-sector banks. Information Commissioner Acharyulu ruled that the exceptions sought by the RBI and the Prime Minister’s Office were not valid, and the public interest far outweighed any concerns about disclosing these facts. He also cited past orders of the CIC and Supreme Court that supported such disclosures.
Finally, in his ruling, he pointed out that the RBI governor and others were willfully disobeying Supreme Court orders, as well as past orders of the Information Commission. “If the banking regulator like RBI will not honor the constitutional institution’s directions, what will be the effect of the Constitution on securing rule of law?” he asked in his order.
The Commission’s quandary
Acharyulu’s order has put RBI governor Patel in a tight spot and threatens to embarrass the Prime Minister’s Office. Worried about the fallout, the chief information commissioner, R K Mathur, a former bureaucrat, has called for an urgent meeting on Tuesday morning, November 6. According to at least two sources in the commission, Mathur wants to review the order passed by Acharyulu, and also see if a “correction” can be issued.
A key issue that Mathur wants to discuss, said sources, is how a matter pertaining to the RBI ended up with Acharyulu. Such matters are under the “jurisdiction” of another information commissioner and former bureaucrat, Sudhir Bhargava. However, all matters related to the Ministry of Labor and Employment come under Acharyulu. An information application to this ministry had been submitted in the appeal and contained questions that also related to the RBI as well as previous governor Rajan’s letter to Prime Minister Modi.
With only a few months until general elections, the revelation of the top willful defaulters and Rajan’s letter could prove to be explosive and deeply embarrassing to the Modi government. This is on two counts. In the run-up to the 2014 general elections, Modi had turned the non-recovery of NPAs into a major election issue. Second, many of the willful defaulters are believed to be corporate houses close to the ruling party and its top ministers.
Ideally, the CIC should recruit information commissioners from various fields. However, it has largely been dominated by retired bureaucrats and is usually seen as a post-retirement sop to a government’s loyalists
Ideally, as a senior commission official pointed out, by convention any application seeking information may pertain to more than one ministry or government entity. “In such cases, we direct the case to the information commissioner, who deals with the majority of the queries,” a senior CIC official told Asia Times. The argument is that while the original appeal emanated from the Ministry of Labor, the fact that it had more questions pertaining to the RBI meant that it should have gone to Information Commissioner Bhargava.
However, another senior CIC official pointed out the legal position regarding this quandary. “The CIC knows that the show cause notice issued to the RBI governor is legally sound and cannot be withdrawn. There is no such provision. Also, if a case pertains to more than one ministry or government entity, it can not be bifurcated to different commissioners. So what Acharyulu did was quite sound legally.”
At the heart of the matter lies another major conundrum. Ideally, the CIC should recruit information commissioners from various fields. However, it has largely been dominated by retired bureaucrats and is usually seen as a post-retirement sop to a government’s loyalists. However, Acharyulu is a former academic and law professor from a prestigious national law school. His earlier decisions, including one allowing a petitioner to seek the prime minister’s graduation records, created a major embarrassment and led to a reduction in his charter of subjects under his jurisdiction in the CIC.