If you are planning to get a safe deposit locker in a bank, the rental charge to be paid upfront has gone up and the terms are now tougher. The Reserve Bank of India (RBI) in its new instructions for lockers in banks has 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 in case of such eventuality.
Banks, however, can exercise their discretion and not insist on such Term Deposits from the existing locker holders or those who have a satisfactory operative account.
However, 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.
Customer Due Diligence
The existing customers of a bank who have applied for a locker facility and who are fully compliant with the criteria of Know Your Customer (KYC) Directions, may get the facilities of safe deposit lockers/safe custody article.
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Customers who do not have a relationship with a bank can hire a safe deposit locker/safe custody article after complying with the criteria under the Master Direction Know Your Customer (KYC) Directions.
Banks have to carry out due diligence for all the customers in whatever capacities they are going to hire a locker.
With rising complaints of lockers being used to stash illegal goods and assets, the RBI has asked banks 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.
In case a bank suspects the deposit of any illegal or hazardous substance by any customer in the safe deposit locker, the banks now have the right to take appropriate action against such customers.
Model Locker Agreement
The nudge for fixing the rules came from the Supreme Court in February this year. The SC had asked RBI to lay down regulations in six months for locker facility management in banks.
A bench comprising Justices MM Shantanagoudar and Vineet Saran had said, “As is evident from the rising demand for such services, lockers have become an essential service provided by every banking institution due to rapid gains in technology. We are now transitioning from dual key-operated lockers to electronically operated ones. There is the possibility that miscreants may manipulate the technologies used in these systems to gain access to the lockers without the customers’ knowledge or consent.”
The court 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.
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In response, the RBI has directed that all banks will have a board-approved agreement for safe deposit lockers. For this purpose, banks may adopt the model locker agreement to be framed by IBA (Indian Banks Association).
Banks are on notice to ensure that any unfair terms or conditions are not incorporated in their locker agreements. Banks can also renew their locker agreements with existing locker customers by January 1, 2023.
For each locker hiring application, banks will take recent passport-size photographs of locker-hirer(s) as well as individual(s) authorised by locker hirer(s) to operate the locker and preserve the records pertaining to locker-hirer in the bank’s branch.
At the time of allotment of the locker to a customer, the bank shall enter into an agreement with the customer to whom the locker facility is provided, on a duly stamped paper.
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. The original agreement shall be retained with the bank’s branch where the locker is situated.
To ensure that banks do not face a situation where the locker-hirer neither operates the locker nor pays the rent, banks have been allowed to obtain a Term Deposit, at the time of allotment. This would cover three years’ rent and the charges for breaking open the locker in case of such eventuality.
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If locker rent is collected in advance, in the event of the surrender of a locker by a customer, the proportionate amount of advance rent collected shall be refunded to the customer.
If there is an event such as merger/closure/shifting of branch warranting physical relocation of the lockers, the bank shall give public notice in two newspapers (including one local daily in vernacular language). The customers shall be intimated at least two months in advance along with options for them to change or close the facility.
In case of unplanned shifting due to natural calamities or any other emergency situation, banks shall make efforts to intimate their customers suitably at the earliest.
Security of the Strong Room/Vault
With rising cases of locker heists, banks have been asked by the RBI to take necessary steps to ensure that the area in which the locker facility is housed is properly secured to prevent criminal break-ins.
The risks of accessibility of an allotted locker from any side without the involvement of the locker-hirer concerned may be assessed and kept on record. Banks should have a single defined point of entry and exit to the locker room/vault.
The place where the lockers are housed must be secured enough to protect against hazards of rain/flood water entering and damage of lockers in contingent situations. The risks posed by fire hazards in the area should also be assessed and minimised.
Banks also have to now cover the entry and exit of the strong room and the common areas of operation under CCTV cameras and preserve its recording for a period of not less than 180 days. In case any customer files a complaint at the bank that his/her locker was opened without their knowledge, or any theft or security breach is noticed, the bank has to preserve the CCTV recording till the police investigation is completed and the dispute is settled.