Just two weeks back, Reserve Bank of India was directed by the Supreme Court (SC) of India to lay down regulations in six months for locker facility management in banks. Let me reproduce gist of the apex court’s direction:
“With the advent of globalization, banking institutions have acquired a very significant role in the life of the common man as both domestic and international economic transactions within the country have increased multiple folds. People are hesitant to keep their liquid assets at home as we are steadily moving towards a cashless economy. As is evident from the rising demand for such services, lockers have become an essential service provided by every banking institution. A customer is completely at the mercy of the bank, which is the more resourceful party, for the protection of their assets. In such a situation, the banks cannot wash off their hands and claim that they bear no liability towards their customers for the operation of the locker.”
The court further said that banks should not have the liberty to impose unilateral and unfair terms on the consumers. The court has also left open to the RBI to issue suitable rules with respect to the responsibility owed by banks for any loss or damage to the contents of the lockers, so that the controversy on this issue is clarified as well.
Notably, the Reserve Bank of India (RBI) said in 2017 that banks would not be liable to compensate the locker holder if the contents of his/her locker are stolen or damaged due to a natural calamity.
Even as incidents of loss of valuables in a bank locker have raised safety concerns among the customers about the lockers, there is no let-up in rush of customers thronging the bank branches for allotment of a locker. Typically, a common customer avails the facility of a bank locker to keep jewellery and important documents safe.
In the wake of SC’s direction, let’s take a fresh look at some critical locker issues which a customer should know.
Are bank lockers safe?
Bank lockers are considered to be the safest place to store valuables like jewellery, important documents or anoy other precious thing. In other words, a bank locker is as safe as a bank branch since the articles in the locker are as vulnerable to natural calamities, theft and burglary as the bank branch. However, the safety precautions and arrangements made by banks are comprehensive. So the articles are relatively safer at the bank than at home.
It’s to be noted that 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.
Who will take the responsibility for loss of valuables in the locker due to theft or damage in a natural calamity?
Reserve Bank of India (RBI) said in 2017 that banks would not be liable to compensate the locker holder if the contents of his/her locker are stolen or damaged due to a natural calamity. So, the banks generally do not take the responsibility of compensating a customer in such cases. Here position of the banks is based on a legal argument that there is no ‘entrustment’ of contents placed in lockers by the depositor to the bank. The banks keep no account of the things a customer deposits there, for it is supposed to be a secret, which he/she shares with no one. Not even with the bank. Consequently, the bank has no way of finding out if the locker holder is lying about the loss he or she has incurred. Therefore, the banks aren’t responsible for its contents.
Besides, at the time of taking possession of the locker, the customer signs to abide by the terms and conditions envisaged in the agreement like, “the bank will not be held liable or responsible for any loss or damage to any article, document, or valuables deposited in the locker as a result of theft, robbery, fire or any other incident or pilferage.” Moreover, if the customer claims compensation for the loss, the bank cannot estimate it because the bank does not know the real value of the items kept in a locker.
When a bank is not liable to compensate the locker holder in the event of any loss, does it also take away the consumer’s right to act against the bank?
In this situation the consumers’ right is protected and they can act against bank through legal means. An aggrieved customer who has suffered loss of valuables in the locker can file a civil suit claiming damages for theft or negligence either in a civil court or in a consumer court. On the other hand, if the consumer has reason to believe that the employees were involved in removing the goods from the locker, then he/she can file a criminal suit under Section 409 of the Indian Penal Code. But such cases are few and far between, for negligence is difficult to prove and the extent of loss hard to ascertain in the absence of an inventory. Even the consumer forums plead helplessness. So this is a grey area, which has not been clearly dealt with either in the banking regulations or in any law.
Generally, the bank is not supposed to know what’s there in your locker, which means you are in a fix if something is lost. Now, an inventory will defeat the very purpose of the locker. But somebody has to be accountable in the event of a theft or loss. At the moment it is a paradoxical situation for the customer.
Is there any way out for customers to protect their valuables in locker in the event of any mishap?
Even as bank lockers are definitely a much safer option, the safest would be to insure the contents kept in the locker. There are general insurance companies which provide bank locker insurance under their home insurance or content insurance products. Not only jewellery and valuables, one can also opt for insuring important documents kept inside bank locker against any loss or damage, wherein at the time of claim the replacement cost is born by insurance company up to the agreed limit. There is an option for a comprehensive coverage instead of just insuring contents kept in the locker because the chances of theft outside the bank locker are higher.
What are the guidelines for nominees and legal heirs for claiming contents of a deceased locker hirer?
First, we have to understand that there are two types of locker holders – sole locker hirer and joint locker hirers. In both the cases, the Reserve Bank of India has issued instructions to the banks to settle such issues. If the sole locker hirer nominates a person, banks should give to such nominee access of the locker and liberty to remove the contents of the locker in the event of the death of the sole locker hirer.
In case the locker was hired jointly with the instructions to operate it under joint signatures, and the locker hirer nominates person, in the event of death of any of the locker hirers, the bank should give access of the locker and the liberty to remove the contents jointly to the survivor(s) and the nominee(s). In case the locker was hired jointly with survivorship clause and the hirers instructed that the access of the locker should be given over to ‘either or survivor’, ‘anyone or survivor’ or ‘former or survivor’ or according to any other survivorship clause, banks should follow the mandate in the event of the death of one or more of the locker-hirers.
However, it should be clear to the survivor(s) and nominee(s) that access to locker and safe custody articles is given to them only as a trustee of the legal heirs of the deceased locker hirer i.e., such access given to him shall not affect the right or claim which any person may have against the survivor(s) and nominee(s) to whom the access is given.