Why is Indian Banks’ Association not under RTI?

S Kalyanasundaram | Updated on February 25, 2021

As a body representing banking industry, IBA’s claim that it’s only a voluntary body and not subject to oversight isn’t convincing

Is the Indian Banks Association (IBA) a law unto itself? In a recent proceeding conducted by the Chief Labour Commissioner (Central), New Delhi, as directed by the Allahabad High Court, the IBA submitted a statement, which in Para 8 states: “That it is stated that Government does not exercise control over the functioning of IBA.”

Should the statement be understood as a claim that the IBA is not answerable even to the Government of India? Can any institution functioning under the laws of the country say that it is not answerable to the government?

The IBA claims it is a voluntary association of member banks. It also claims that it is neither a governmental entity nor a regulatory authority, and it is not amenable to writ jurisdictions of courts and not subject to the Right to Information Act, 2005.

Currently, the IBA has as its members public and private sector, foreign and urban co-operative banks, as also asset reconstruction companies, credit rating companies, credit guarantee funds, financial services companies and credit bureaus.

The IBA lists 19 items as its objectives. The major objectives are to: Render assistance and provide various common services to the banking industry; develop and implement new ideas and innovations in banking services, operations and procedures; coordinate on procedural, legal, technical, administrative or professional problems faced by banks; and initiate advance planning for introduction of new systems or services in the banking industry.

Thus, it covers the entire gamut of the banking industry and banks practically follow the advice of the IBA in all these areas, of course subject to regulatory guidance from the Reserve Bank of India.

Off and on, the IBA makes various recommendations to the government and the RBI over various banking-related matters like treatment of non-performing assets, formation of Bad Bank, etc. The IBA conducts wage negotiation with workers’ and officers’ unions, and signs a wage pact called Bipartite Settlements and Joint Notes. The IBA claims that this is as authorised by banks.

The IBA is financed by member banks. The public do not know the financial status of this Association, though all PSBs and listed private banks contribute to its functioning. All along, the IBA has been claiming that it does not come under the RTI Act. So far, the IBA has not designated any Central Public Information Officer (CPIO).

In the RK Jain versus Indian Banks’ Association case, the Central Information Commission considered whether the IBA comes under the RTI Act. The Commission, in its order of November 13, 2017, said: “Taking into account that the IBA performs functions as state agency and its majority control vests in Government of India-appointed Managing Directors of public sector banks, the IBA qualifies to be a public authority under the RTI Act, 2005. The Commission, therefore, directs the IBA to designate an official of the IBA as the CPIO at the earliest as per provisions of Section 5 of the RTI Act, 2005 and also to comply with Section 4 of the RTI Act, 2005 within four weeks of the receipt of the order of the Commission.”

Further, the Commission held: “So far as control part of appropriate government is concerned, it is noted that the IBA is an agency or instrumentality of the state. The appropriate government controls it as majority of Managing Committee members are Managing Directors of public sector banks, who in turn are Government of India employees...”

Court stays order

Instead of appointing a CPIO, the IBA filed a writ petition before the Delhi High Court (WP No 11046/2017), and on December 13, 2017, the High Court stayed the CIC order. While granting the initial stay, the court observed the following (among other observations): “The short question involved in the present case is whether the petitioner is a public authority within the meaning of Section 2(h) of the Right to Information Act, 2005. It is stated that the petitioner is an association of banks. It has 241 members and only nine members are public sector banks.” The case is yet to be decided.

The number of PSBs mentioned here seems to be factually incorrect and in all probability this should have been from an incorrect affidavit. Before the merger of 10 PSBs into four banks effective April 1, 2020, there were 16 PSBs. Moreover, it may not be appropriate to compare the number of public sector and private banks.

Ideally, how the positions are held or who controls the IBA should have been considered and also the financial contribution to run the IBA. More than 50 per cent of the management committee members are from PSBs.

The amount of money that flows from PSBs to this institution is not available in public domain.Transparency and accountability in administration is sine qua non of a participatory democracy. The Government must instruct PSBs that are in the Managing Committee of the IBA suitably and ensure that the institution comes under the RTI Act. When PSBs are under RTI, why not the IBA?

The writer is a retired banker


Published on February 25, 2021

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