RBI Denies RTI on Bank Failures: Section 8(1)(d) Misused to Hide Critical Financial Information

The Case

In a landmark RTI application filed on October 15, 2024, activist Meera Rajesh sought crucial information from the Reserve Bank of India regarding the regulatory actions taken against three private banks that reported significant NPAs in the past two years. The application specifically requested:

1. Copies of inspection reports for banks with NPA ratios exceeding 10%
2. Details of regulatory penalties imposed on non-compliant banks
3. Timeline of actions taken to protect depositor interests
4. Communication between RBI and bank management regarding compliance issues

The Denial

On November 30, 2024 - well beyond the statutory 30-day limit - the RBI’s Public Information Officer responded with a blanket denial, citing Section 8(1)(d) of the RTI Act. The authority claimed that disclosure would:

“Harm the fiduciary relationship between the Reserve Bank and supervised institutions, potentially affecting market confidence and financial stability.”

Why This Denial is Problematic

1. Misinterpretation of Section 8(1)(d)

Section 8(1)(d) protects information received in fiduciary capacity from a third party. However:

• Regulatory information is generated by RBI’s supervisory function, not received from banks
• Public interest in banking sector transparency outweighs claimed fiduciary concerns
• RBI is a statutory regulator, not a private fiduciary

2. Public Interest Override Ignored

The RBI completely ignored Section 8(2), which mandates disclosure when public interest outweighs harm:

• Depositor protection is paramount public interest
• Banking sector health affects entire economy
• Transparency builds genuine market confidence

3. Delayed Response

The 45-day response time violates Section 7(1) requiring response within 30 days, yet no explanation or penalty was applied to the PIO.

Pattern of Systematic Denial

This case represents a broader pattern where financial regulators use Section 8(1)(d) as a catch-all exemption. Our analysis of 247 RTI applications to financial regulators shows:

• 73% denied citing Section 8(1)(d)
• 89% of denials ignored public interest considerations
• 45% exceeded statutory time limits

Appeal Strategy

The first appeal, filed on December 5, 2024, challenges:

1. Misapplication of exemption: RBI cannot claim fiduciary privilege over regulatory data
2. Failure to apply public interest test: Banking transparency serves larger public good
3. Procedural violations: Delayed response without explanation

Broader Implications

This denial pattern enables:

• Regulatory capture by shielding poor oversight from scrutiny
• Systemic risk by preventing early warning signs from becoming public
• Depositor vulnerability by limiting accountability mechanisms

Documents Available

We’ve made the following documents available for download:

• Original RTI Application
• RBI Denial Letter
• First Appeal Submission
• Legal Analysis by Banking Law Expert

Next Steps

The appeal is currently under review by the First Appellate Authority. If denied, this case will proceed to the Central Information Commission, potentially setting important precedent for financial sector transparency.

Timeline for Updates: We expect the first appeal response by January 15, 2025. This case demonstrates the critical need for specialized RTI advocacy in financial sector transparency.

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This case study is part of our ongoing documentation of systematic transparency failures in India’s financial sector. Support our work by contributing case studies or funding our legal challenges.