In August 2021, the Reserve Bank of India (RBI) in its new guidelines for bank lockers, among other things, stated that to ensure prompt payment of locker rent, banks would be allowed to take a ‘Term Deposit’, at the time of allotment of a locker. This would cover three years’ rent and the charges for breaking open the locker under contingency. Banks are allowed to exercise their discretion and not insist on such ‘term deposits’ from the existing locker holders or those who have a satisfactory operative account. This has been done to ensure that banks do not face a situation where the locker-hirer neither operates the locker nor pays the rent. Hence it would be prudent to pay your locker rent on time to avoid such troubles. Banks cannot force the existing customers with active locker accounts for such a deposit.

 

For example, in case the annual rent of your bank locker is Rs7,000, then the maximum amount of fixed deposit the bank can ask is Rs21,000 and a a nominal locker breaking fee, not more than Rs500.

 

Earlier, many banks (in order to achieve their sales targets) used to aggressively sell ULIPs or endowment plans, or force customers to open term deposit of an exorbitant amount. This rule is expected to put an end to this blatant mis-selling practised by banks. As per RBI guidelines, banks cannot offer any insurance product for the locker contents, directly or indirectly.

 

These new bank locker operation rules will be applicable to both existing and new lockers and would come into effect from 1 January 2022. The nudge for fixing the rules came from the Supreme Court (SC) in February this year. The SC had asked RBI to lay down regulations in six months for locker facility management in banks. The SC had stated that a customer is completely at the mercy of the bank, which cannot wash off their hands and claim that they bear no liability towards their customers for the operation of the locker.

 

We take a look at these rules are and how they can help curb the malpractices of the banks.

 

1. Compensation: Bank lockers are often used to store valuables such as jewellery and property papers. But what happens if your articles in a bank locker are lost? Earlier banks were not responsible for the loss of items in your locker and you could not claim financial damages from them. There have been several reports of thefts at banks where lockers were broken into but those renting the locker were not compensated for those losses.

 

To remedy this, the RBI recently announced a new rule that allows locker holders to claim compensation. But the new rules make it clear that the liability of the bank is fixed at 100 times the annual rent of the locker only if the contents in the locker are lost due to negligence or fraud committed by the employees, fire, theft, robbery, collapse of the building, etc. But banks do not have any liability if the locker contents are lost or damaged due to natural calamities like- earthquakes, floods, thunderstorms.

 

E.g. In case the annual rent of the locker is Rs 7000 the bank is liable for a compensation of Rs 7 lakh.

 

RBI rules further clarify that bank employees should take proper care, maintain due diligence and make every effort to prevent such damage and the bank should also have branch-level insurance against such happenings to minimize the risk.

 

2. Nomination and Succession: In a move that would bring relief for bank customers, the RBI has made it mandatory for banks to settle the claims of deceased locker, hirers and release contents of the locker to survivor(s)/nominee(s), within a period not exceeding 15 days from the date of receipt of the claim. This is subject to submission of proof of death of the depositor and suitable identification of the claimant(s) with reference to the nomination, to the bank's satisfaction.

 

Bank lockers can be held in joint name, and a nomination facility is also available. So, in the event of death or unavailability of the first holder, the joint holder can access and operate the locker. If both the holders die the nominee can access the locker by providing the required documents along with the claim form.

 

3. Locker Allotment Process: To protect the customers from the corrupt practices adopted by the bankers due to high demand for lockers and lack of transparency in the locker allotment process, the new rules direct the banks to maintain a branch-wise list of vacant lockers, electronically on the Core Banking System (CBS) or any other such mechanism, issued by the RBI. 

 

Also, if the locker is unavailable, the customer has to be provided with a wait-list number and the bank cannot deny any locker application.

 

4. SMS/Email alerts: The bank will have to send you SMS and email alerts the same day you accessed the locker. Alerts would also be sent if the locker is not properly closed or the bank has to open the locker due to any genuine reason. This would help prevent any unauthorized access to the locker. 

 

5. CCTV Footage of Locker Room Operations: As per the new rules, banks have been mandated to install CCTV cameras in the locker room and keep the footage of the operations for 180 days. They may also install an Access Control System which will create a digital record of the access with a time log if required. 

 

6. New Locker Agreements: All existing bank locker customers have to sign new locker agreements on or before 1 January 2023. The new agreement will include all these revised Bank Locker Rules. This has to be approved by the bank’s board. A model agreement is to be drafted by the Indian Banking Association (IBA). A duplicate copy of this agreement would be provided to you and the original one would be kept at the branch where the locker is located.

 

The bank will have to disclose the model agreement along with the updated terms and conditions and Standard Operating Procedures (SOPs) related to bank locker operations on their website. In addition, they are also required to display the list of branches where the lockers are available and the details of locker charges. 

 

7. Locker Closure: In case one wants to close the locker, one has to fill the locker surrender form, remove all the locker contents, and return the key to the bank. The locker agreement would be terminated and the rent collected in advance at the time of allotment would be refunded.