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Is FD a must? All your queries on opening a bank locker answered

New Delhi, June 7, 2023

The Reserve Bank of India (RBI) has extended the deadline for banks to complete the process of renewal of agreements for existing safe deposit lockers in a phased manner by December 31, 2023, with intermediate milestones of 50 per cent by June 30, 2023, and 75 per cent by September 30, 2023.

Banks are already repeatedly releasing advisories to customers and urging locker holders to sign their revised contracts by June 30.

SBI official Twitter account tweeted: “Bank has issued a revised/supplement locker agreement incorporating the customer’s rights. Customers availing locker facilities from SBI are requested to contact their locker holding branch and execute the revised/ supplement locker agreement as applicable.”

Punjab National Bank (PNB) has also started giving out revised bank locker agreements to their customers to comply with the RBI circular.

As per RBI guidelines, the revised agreement takes care of locker users as well as the banks. Earlier, banks were custodian of the lockers but now there is a leasing agreement, which means banks act as lessor and lease out the lockers to customers, who are paying rent to avail this facility.

You don't have to have an existing bank account with the bank to avail its locker facility.

Customers who don't have any other banking relationship with the bank can also rent the safe deposit locker / safe custody article after complying with all the necessary Know Your Customer (KYC) documentation and subject to on-going compliance.

You can't keep anything illegal in the locker

Banks have to incorporate 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. If the bank suspects the deposit of any illegal or hazardous substance by any customer in the safe deposit locker, the bank has the right to take appropriate action against you.

You are to get a wait-list number incase lockers are not available

Banks have to maintain a branch wise list of vacant lockers as well as a wait-list for the purpose of allotment of lockers and ensure transparency in allotment of lockers. The banks have to provide a wait list number to the customers, if the lockers are not available for allotmentment at the time you are applying for one.

The new agreement has to be on a stamp duty provided by bank

At the time of allotment of the locker to a customer, the bank will enter into an agreement with the customer to whom the locker facility is provided, on a paper duly stamped. A copy of the locker agreement in duplicate signed by both the parties shall be furnished to the locker-hirer to know his/her rights and responsibilities. Original Agreement will be retained with the bank’s branch where the locker is situated. The cost of documentation will be borne by the bank. The document will include details of the rights and duties of the user and bank, locker rent, escalation clause etc.

Locker rent

RBI circular forbids banks from tying locker facilities to a fixed deposit beyond what the RBI specifically allows. In order to ensure prompt payment of locker rent, banks are allowed to obtain a Term Deposit, at the time of allotment, which would cover three years’ rent and the charges for breaking open the locker in case of such eventuality

"Banks, however, shall not insist on such Term Deposits from the existing locker holders or those who have satisfactory operative accounts. The packaging of allotment of locker facility with placement of term deposits beyond what is specifically permitted above will be considered as a restrictive practice," said the RBI.

Discharge of locker contents by banks due to non-payment of locker rent

Banks have the discretion to break open any locker if the rent has not been paid by the customer for three years in a row. The bank has to notify the existing locker-hirer prior to any changes in the allotment through a letter and through email and SMS alert to the registered email id and mobile phone number and give him/her reasonable opportunity to withdraw the articles deposited by him/her.

If the letter is returned undelivered or the locker-hirer is not traceable, the bank has to issue public notice in two newspaper dailies (one in English and another in local language) giving reasonable time to the locker-hirer or to any other person/s who has interest in the contents of locker to respond. The locker will be broken open in the presence of an officer of the bank and two independent witnesses.

In case of electronically operated lockers (including Smart Vaults), the use of ‘Vault Administrator’ password for opening of locker will be assigned to a senior official.

Further, banks also have to record a video of the break open process together with inventory assessment and its safe keep and preserve the same so as to provide evidence in case of any dispute or Court case in future.

What will happen to contents of locker once it is broken open?

After breaking open the locker, the contents will be kept in a sealed envelope with detailed inventory inside a fireproof safe in a tamper-proof way until the customer claims it. While returning the contents of the locker, the bank has to obtain acknowledgement of the customer on the inventory list to avoid any dispute in future.

Bank liability capped at 100 times annual rent of the safe deposit locker

In case of events like theft, burglary, fire, fraud by an employee, robbery, building collapse, etc., the bank’s liability shall be for an amount equivalent to 100 times the annual rent of the safe deposit locker.

"As banks cannot claim that they bear no liability towards their customers for loss of contents of the locker, in instances where loss of contents of locker are due to incidents mentioned above or attributable to fraud committed by its employee(s), the banks’ liability shall be for an amount equivalent to one hundred times the prevailing annual rent of the safe deposit locker," said RBI.

But in the case of a natural disaster like earthquake, flood, thunderstorm, lightning, etc. or customer negligence, the bank is not liable for any damage or loss of contents.

Discharge of locker contents if the locker remains inoperative for a long period of time

If the locker remains inoperative for seven years and the locker-hirer cannot be located, even if rent is being paid regularly, the bank can transfer the contents of the locker to their nominees/legal heir or dispose of the articles in a transparent manner. The banks shall ensure that appropriate terms are inserted in the locker agreement executed with the customer specifying the position in case the locker is not in operation for long period.

Insurance of locker contents by the customer

Banks have to clarify in their locker agreement that as they do not keep a record of the contents of the locker or of any articles removed therefrom or placed therein by the customer, they would not be under any liability to insure the contents of the locker against any risk whatsoever. Banks shall under no circumstances offer, directly or indirectly, any insurance product to its locker hirers for insurance of locker contents.

Appoint a nominee

The RBI has advised appointing a nominee to ensure a smooth transfer of locker contents in case of the holder’s death. Banks have appropriate systems and procedures in place to register the nomination, cancellation and / or variation of the nomination, in their books, made by the locker hirers.

Settlement of Claims in case of death of a Customer

Banks have a Board approved policy for nomination and release of contents of safety lockers / safe custody article to the nominee and protection against notice of claims of other persons. In order to ensure that the articles left in safe custody and contents of lockers are returned to the genuine nominee, as also to verify the proof of death, banks have their own claim formats, in terms of applicable laws and regulatory guidelines.

Banks have to settle the claims in respect of deceased locker hirers and shall release contents of the locker to survivor(s) / nominee(s), as the case may be, within a period not exceeding 15 days from the date of receipt of the claim subject to the production of proof of death of the depositor and suitable identification of the claimant(s) with reference to nomination, to the bank's satisfactions.

[The Business Standard]

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