Karnataka Information Commission brings Apex Bank under RTI Act

In a significant order that goes a long way in ensuring transparency in the cooperative banking sector, the Karnataka Information Commission has ruled that the Karnataka State Co-operative Apex Bank qualifies as a public authority under the Right to Information Act, 2005, directing it to comply with provisions of this transparency law.

The ruling came while hearing a second appeal filed by Hanumantha Vasanth Shinde, who had sought copies of documents submitted by Nirani Sugars Ltd. while availing loans from the Apex Bank between March 2022 and June 2024. The bank had declined the request, stating that it was a cooperative society and hence did not come under the purview of the RTI Act.

The bank argued that it was neither owned nor substantially financed by the State government and therefore did not fall within the definition of “public authority” under Section 2(h) of the RTI Act.

However, State Information Commissioner Rajashekara S., who heard the case, rejected the argument, observing that the institution functions under deep and pervasive state control.

In his order, the commissioner examined the historical evolution of the bank, statutory provisions governing cooperative institutions, and the extent of administrative and financial oversight exercised by the State.

The order pointed out that the bank traces its origins to the cooperative movement in the erstwhile Mysore State and was founded by the Registrar of Cooperative Societies in his official capacity. Over the decades, the State government has continued to influence its functioning through policy directions and institutional oversight, it noted.

The commission observed that the Registrar of Cooperative Societies serves as an ex officio director on the bank’s board and retains statutory powers to inspect records, conduct inquiries, and order audits under the Karnataka Co-operative Societies Act, 1959.

Further, audit reports of apex cooperative institutions are required to be submitted to the state government and placed before the legislature. The bank is also regulated by the Reserve Bank of India and supervised by the National Bank for Agriculture and Rural Development for rural credit operations, the order pointed out.

The commission relied on several judicial precedents to determine whether the bank could be treated as an instrumentality of the state. It cited the Supreme Court judgment in Ajay Hasia v/s International Airport Authority case, which laid down tests for identifying State-controlled bodies.

It referred to the Karnataka High Court ruling in B.T. Krishnegowda v/s Karnataka State Co-Operative Apex Bank, which held that the Apex Bank is an instrumentality of the state and therefore subject to writ jurisdiction.

Directions

The commission directed the Apex Bank to appoint Public Information Officers (PIOs) and First Appellate Authorities (FAAs) across its offices and comply with the proactive disclosure requirements under Sections 4(1)(A) and 4(1)(B) of the RTI Act.

It instructed the Principal Secretary of the Cooperation Department and the Registrar of Cooperative Societies to ensure that the bank implements the RTI framework without delay.

Wider implications

The order could have broader implications for cooperative financial institutions in Karnataka as many of which have resisted RTI requests citing their cooperative status.

With the Apex Bank now being declared a public authority, information relating to its functioning — including governance practices and financial decisions — may be subject to public scrutiny under the RTI Act. This is expected to have wider implications as this institution that wields significant political influence, especially at grass-roots, is now being opened to public scrutiny.