The Bombay High Court has delivered a pivotal clarification on the applicability of the Right to Information Act to cooperative banks, rejecting the notion that such institutions automatically qualify as public authorities. This ruling resolves a long-standing ambiguity affecting thousands of cooperative financial institutions across India and redefines the boundaries of transparency obligations in the cooperative banking sector.
Background & Facts
The Dispute
The petitioners, comprising depositors, members, and federations of cooperative banks, sought disclosure of internal records under the Right to Information Act, 2005. These included audit reports, board meeting minutes, loan disbursal criteria, and internal compliance reviews. They contended that since cooperative banks accept public deposits and operate under state registration, they discharge public functions and must be accountable under the RTI Act.
Procedural History
- 2022: Multiple writ petitions filed before the Bombay High Court seeking directions to the Reserve Bank of India and cooperative banks to disclose information under the RTI Act
- 2023: Central Information Commission dismissed petitions, holding that cooperative banks are not public authorities
- 2024-2025: Petitioners challenged the CIC’s orders before the High Court, arguing that State of U.P. v. Rajendra Prasad and RBI v. Jayantilal N. Mistry extended RTI obligations to entities performing public functions
- 2026: The High Court heard seven connected petitions together, including those filed by the Maharashtra Rajya Sahakari Patsanstha Federation and individual depositors
Relief Sought
The petitioners sought a declaration that cooperative banks are public authorities under Section 2(h) of the RTI Act, and directed them to appoint Public Information Officers, respond to RTI applications, and disclose operational and governance records.
The Legal Issue
The central question was whether cooperative banks, registered under state cooperative societies acts and regulated by the Reserve Bank of India, qualify as "public authorities" under Section 2(h) of the Right to Information Act, 2005, merely by virtue of accepting public deposits and operating in the financial sector.
Arguments Presented
For the Petitioner
The petitioners relied on RBI v. Jayantilal N. Mistry to argue that entities performing public functions, even if privately owned, fall within the ambit of public authorities. They emphasized that cooperative banks:
- Accept deposits from the general public
- Are subject to RBI’s prudential norms
- Receive state subsidies and regulatory oversight
- Serve a social objective of financial inclusion They contended that the functional test from Mistry overrides the formalistic classification under the Cooperative Societies Act.
For the Respondent
The Reserve Bank of India and the Union of India countered that cooperative banks are distinct from public sector banks. They are:
- Registered under state cooperative laws, not the Banking Regulation Act
- Governed by their own bylaws and member-elected boards
- Not owned, controlled, or substantially financed by the government They cited State of U.P. v. Rajendra Prasad to argue that mere regulation or public service does not convert a private entity into a public authority. The RBI’s supervisory role, they asserted, is regulatory, not ownership-based.
The Court's Analysis
The Court undertook a rigorous statutory interpretation of Section 2(h) of the RTI Act, which defines a public authority as an entity established by or under the Constitution, by law, or by notification by the appropriate government, and which is substantially financed by the government.
"The fact that a cooperative bank is regulated by the RBI does not equate to it being owned, controlled, or substantially financed by the Union or State Government. Regulation is not ownership."
The Court distinguished RBI v. Jayantilal N. Mistry, noting that the RBI itself was the subject of that case as a statutory body performing public functions. Cooperative banks, by contrast, are private legal entities with mutual ownership structures. The Court emphasized that the substantial financing criterion under Section 2(h)(i) requires direct financial support from the government, not indirect regulatory oversight or deposit insurance through DICGC.
The Court also rejected the argument that the social function of financial inclusion transforms these institutions into public authorities. "The purpose of an entity," the Court observed, "cannot override its legal structure."
Furthermore, the Court noted that the Cooperative Societies Act and the Banking Regulation Act operate in distinct legal spheres. Cooperative banks are not "banks" under the Banking Regulation Act, and therefore cannot be assimilated into the category of public sector banks.
The Verdict
The petitioners’ claims were dismissed. The Court held that cooperative banks are not public authorities under the RTI Act. The mere acceptance of public deposits, regulatory oversight by the RBI, or performance of a public function does not satisfy the statutory criteria under Section 2(h). The relief sought was denied.
What This Means For Similar Cases
Cooperative Banks Are Not Subject to RTI Obligations
- Practitioners must advise clients that RTI applications filed against cooperative banks are legally untenable unless the bank is explicitly notified as a public authority
- Information officers at cooperative banks may lawfully reject RTI requests citing this judgment
- Public interest litigants seeking transparency must now rely on cooperative societies legislation or internal audit mechanisms
Regulatory Oversight ≠ Public Authority Status
- The judgment reinforces that regulatory control by RBI, SEBI, or other agencies does not convert private entities into public authorities
- This principle applies equally to private hospitals, educational institutions, and NBFCs regulated by statutory bodies
- Practitioners should challenge any CIC or State Information Commission order that conflates regulation with ownership
Transparency Must Be Sought Through Alternative Channels
- Petitioners may seek information under the Cooperative Societies Act, 1912, or state-specific cooperative laws
- Audited financial statements of cooperative banks are often available under the RBI’s Master Circular on Disclosure Norms
- Members may invoke their rights under Section 26 of the Multi-State Cooperative Societies Act to inspect books of accounts
