Following the Supreme Court’s directions in February 2021, the Reserve Bank of India (RBI) recently came up with revised instructions for safe deposit locker services being offered by banks. The amended guidelines, which supersede the instructions issued in this regard in 2007, creates liability on banks, which now cannot claim ignorance of a locker’s contents.
The revised instructions will come into force with effect from January 1, 2022 and will be applicable to both new and existing lockers. In light of the proposed changes, we help you understand how safe deposit locker services work.
What is the big change in the latest RBI guidelines vs the 2007 instructions?
The apex court, in February 2021, observed that banks cannot leave the customers in the lurch on loss of/damage to content merely by claiming ignorance of the contents of the lockers. Thus, the new RBI guidelines create a liability on banks under certain circumstances.
When there is loss of contents due to theft, fire, damage to building, negligence or due to fraud committed by its employee(s), the bank will be liable be for an amount equivalent to one hundred times the prevailing annual rent of the safe deposit locker.
However, note that the bank shall not be liable for any damage and/or loss of contents of locker arising from natural calamities or Acts of God such as earthquake, floods, lightning and thunderstorm or any act that is attributable to the sole fault or negligence of the customer. Banks are just expected to exercise appropriate care to their locker systems to protect their premises from such catastrophes.
Further, the new guidelines specifically mentioned that banks cannot, directly or indirectly, offer any insurance product to its customers for insurance of locker contents. Be aware that banks do not keep a record of the contents of the locker, and thus they would not be under any liability to insure the contents of the locker against any risk.
What if I don’t pay the locker rent?
Banks have the discretion to break open any locker following due procedure if the rent has not been paid by the customer for three years in a row.
The new RBI guidelines are vocal about this too following the February 2021 SC judgement that the customers have to be informed before a bank breaks open a locker.
As per the new instructions, the bank shall ensure that it notifies the existing locker-hirer prior to any changes in the allotment and give him/her reasonable opportunity to withdraw the articles deposited by him/her.
After breaking open of locker, the contents shall be kept in sealed envelope with detailed inventory until the customer claims it.
While returning the contents of the locker, the bank shall obtain acknowledgement of the customer on the inventory list to avoid any dispute in future.
Who can get a locker and how does locker allotment work?
You can get a safe-locker facility for your precious belongings (except illegal or any hazardous substance), if you are a KYC-compliant customer with a bank. Even if there is no prior relationship with the bank, you may be given the facility subject to KYC compliance.
Banks must maintain a branch-wise list of vacant lockers, as per the new guidelines. SBI Bank seems to have already offering this service.
One can access SBI’s online locker enquiry at https://tinyurl.com/sbilocker, based on selection of state, district and pin code.
To ensure transparency, banks acknowledge all applications received for allotment of locker and give a wait list number, if there is no availability. At the time of allotment of the locker, the bank will enter into an agreement with the customer on a stamped paper.
As per the current guidelines, banks shall display the model locker agreement on the their website along with all the terms & conditions and the standard operating procedures (SOPs) on various aspects for public viewing.
Can the bank ask me for a term-deposit to avail locker services?
Banks are allowed to obtain a term-deposit, at the time of allotment, to ensure prompt payment of locker rent. Note that the term-deposit requested by banks cannot exceed three years’ rent and the charges for breaking open the locker in case of such eventuality. Banks, however, cannot insist on such term deposits from the existing locker holders or those who have a satisfactory operative account.
Is there a nomination facility for locker services?
Yes. The banks shall offer nomination facility in case of safe deposit lockers as well. You may have to go through the bank’s policy to understand the policy for nomination and protection against notice of claims of other persons. To avoid inconvenience and undue hardship to legal heirs or the claimant, the new guidelines by RBI mentioned the time limit before which settlement of claims to be made to nominee in respect of deceased. It says that the claims are to be settled within a period not exceeding 15 days from the date of receipt of the claim, provided, proof of death of the depositor and suitable identification of the claimant(s) with reference to nomination are submitted.
How secure will my belongings be?
Banks are liable to exercise due care and necessary precaution for the protection of the lockers provided to the customer. The new guidelines further stress on this point as the RBI specifically ask banks to take required steps to ensure that the area in which the locker facility is housed is properly secured to prevent break-ins as well as damage from rain or fire.
In case any customer has complained to the bank that his/her locker is opened without her authority, or any theft or security breach is noticed/observed, the bank is also liable to preserve the CCTV recording till the police investigation is completed and the dispute is settled.