In the present times, locker facilities offered by banks have assumed greater significance. Like any product or service, the safe deposit locker service has been in great demand as people want their valuables to be stored in a most secure way.
The Reserve Bank of India (RBI) rules are in place to regulate the locker facility which, both banks and customers, have to abide by. The RBI has been revising the guidelines and last revised instructions on the matter were issued on August 18, 2021.
However, despite norms in place to regulate the locker facility, disputes between customers and the banks have been inevitable and mostly it is the customer who has been on the receiving end.
Remarkably, the Supreme Court, on February 19, 2021, issued directions to the RBI to issue regulations and rules with respect to the responsibility owed by banks for any loss or damage to the contents of the locker.
The apex court in a case regarding lockers, (Amitabha Dasgupta Vs. United Bank of India), expressed how the rapid advent of technology resulted in the transition from dual key-operated lockers to electronically operated lockers.
It noted the possibility that miscreants may manipulate the technologies used in these systems to gain access to the lockers without the customers’ consent and the customer is completely at the mercy of the bank.
Meanwhile, the present RBI document envisages the rules in line with the SC directions, regarding safe deposit locker and safe custody article facility provided by banks.
These guidelines have already considered various developments in banking and technology, the nature of consumer grievances and the feedback received from banks and the Indian Banks’ Association (IBA) and are no more generic in nature.
Who can avail a locker facility from the bank?
Anybody can approach a bank for a locker facility, but with certain conditions. There are two broad categories of customers, which include existing customers of a bank and those who do not have a banking relationship with the bank. In the later category, the banks have to ensure that they are in full compliance with the criteria under Know Your Customer (KYC) norms. However, banks carry out due diligence for all the customers who have applied for a locker.
Precisely, you can get a locker facility from any bank branch. But usually banks give preference to their own account holders. Since it makes sense for the banks to prefer their own customers, it would be in the fitness of things to open a savings/current account with a branch which is convenient to you to visit.
What kind of documentation is required to obtain a locker facility?
Documentation is simple. You are required to fill the application form at the branch. You also need to submit Know Your Customer (KYC) documents along with photographs. You have to also sign an agreement with the bank. In case a joint application is made, all members are required to submit KYC documents and sign the agreement at the bank branch. You can operate a locker as joint holders and or in the ‘either or survivor’ mode. Retain a copy of this agreement.
Notably, banks have a uniform locker agreement framed by IBA (Indian Banks Association) which doesn’t contain any unfair terms or conditions. There is a clause in the locker agreement that the locker-hirer/s shall not keep anything illegal or any hazardous substance in the Safe Deposit locker. In case a bank has suspicions about the deposit of illegal or hazardous substances in the locker by a customer, banks can take appropriate action against the customer. A duplicate copy of the agreement entered on a duly stamped paper signed by both the parties is provided to the customer to keep them abreast of their rights and responsibilities while the original agreement is retained with the bank.
Is opening a fixed deposit mandatory for getting a locker facility?
No. The existing locker rules don’t contain any such pre-condition. As per RBI instructions, banks cannot force customers to open a term deposit account for availing a locker facility.
However, the rules allow banks to obtain a fixed deposit covering three years’ rent and the charges at the time of allotment. So, the bank can ask a customer seeking a locker facility to open a term deposit covering three years of rent and charges of the locker. This is done to ensure prompt payment of locker rent as there may be cases where the locker-hirer stops operating or paying the rent for the locker.
Notably, in case a locker holder surrenders the locker after paying the rent in advance, the banks have to return the proportionate amount of advance rent collected from the customer.
How safe is a bank locker?
A locker, by itself, does not ensure the safety of goods. It’s the safety infrastructure created by the bank that makes it secure. As banks are entrusted with the task of safeguarding public wealth, they have multiple layers of security in place, such as quality locks, strong room, electronic surveillance, alarm systems, regular policing and internal and external audit to ensure consistent quality of service with safety measures.
One of the best things is that customers are getting real time SMS alerts about the operations of the locker. In other words, with respect to accessing the locker, banks now send an email and SMS alert to the registered email ID and mobile number of the customer before the end of the day as a positive confirmation intimating the date and time of the locker operation. This means unauthorized locker access, if any, will be pointed out immediately.
Who is responsible for any damage or loss of contents of the locker?
As per the RBI rules, banks are not liable for any damage or loss of contents of locker arising from natural calamities or ‘Acts of God’ like earthquake, floods, lightning and thunderstorm or any act that is attributable to the sole fault or negligence of the customer. However, banks have to take measures to protect the area from catastrophes. The responsibility of the bank includes ensuring proper functioning of the locker system, guarding against unauthorized access to the lockers and providing appropriate safeguards against theft and robbery.
It is worth mentioning that the liability of the bank has been limited to 100 times its annual rent in case of fire, theft, frauds by employees, or building collapse.
Is insurance facility available for bank lockers?
Some general insurance companies provide bank locker insurance under their home insurance or content insurance products. Some companies insure jewellery for its high net worth customers under a packaged policy. This insures jewellery kept in the locker, home and also if someone is wearing it. Some companies offer an insurance policy which protects the items kept in a bank locker such as jewellery and other valuables against various risks including fire, earthquake, burglary, holdup, infidelity of bank employees , Act of God perils etc. Not only jewellery and valuables, one can also opt for insuring important documents kept inside bank lockers against any loss or damage, wherein at the time of claim the replacement cost is borne by the insurance company up to the agreed limit.
However, banks are under instructions not to offer any insurance product to their locker hirers for insurance of locker contents.
DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.