CA Sharad Jain

Articles discuses Need To Introduce Transparency In Bank Locker Facility to Discourage generation of Black Money or to keep the same in check.

BACKGROUND : Presently, in India, a locker facility is provided by many bank branches to their customers, wherein the customers availing such facility (i.e., locker holders) can keep their valuable items like jewellery etc. safely.

The locker holders enjoys complete privacy in respect of lockers held by them, as there is no mandatory requirement / practice to keep and preserve on the bank records, an inventory / details of the items kept in the bank lockers, which can be later on referred by the tax / other regulatory authorities as and when required.

DRAWBACK / PROBLEM : In such a situation, these lockers may be misused by many locker holders for hiding valuable items etc. acquired from unaccounted / undisclosed / unethically earned money (popularly known as black money) or to hide documents etc. relating to earning / investment of such money.

SUGGESTIONS : Therefore, as a measure to prevent / discourage keeping of black money in bank lockers, transparency is required to be introduced in the bank locker system. In this regard, various suggestions are as under :

Mandatory Preparation Of Inventory Of Items Kept In The Locker : An inventory / details of valuable items (consisting of item name, weight & self declared estimated value) kept by the locker holder in his bank locker should be mandatorily prepared (signed by both by the bank official & locker holder) and should be preserved in the bank’s confidential records. The basic facilities of weighing etc. should be available in bank branch itself to avoid delays / burden of additional work / cost on the locker holders. In cases where documents are kept in the locker, brief description thereof in a prescribed format (e.g., purchase deed of house at House No. 1, XYZ Colony, Ujjain etc.) should be kept.

Mandatory Keeping Of Digital Image Of Items Kept In The Locker : Additionally, the digital image of valuable items / documents kept in the locker should be taken and preserved in the Central Computer System of the bank. The Basic facilities for taking image etc. should be available in bank branch itself (with no additional charges from locker holder) to avoid delays / burden of additional work / cost on the locker holders.

Valuation Of Items Kept In The Locker By Approved Valuer (In Major Cases) : In cases, where no. of valuable items / weight / estimated self declared value exceeds prescribed limit (i.e., in major cases)(limits to be prescribed), instead of adopting self declared estimated value, the actual valuation thereof may be obtained from the bank’s approved valuer. The facility of valuation should be provided in the bank premises itself (at the cost of the locker holder) for safety etc. of valuables. If there is no change in the physical state of any valuable item then the valuation thereof should be accepted for next 5 years (for reduced cost burden on locker holders).

Entry In Bank Account For Value Of Item Etc. Kept In The Bank Locker : The name, weight & self declared estimated value / actual value of a valuable item and indicative brief detail of documents (e.g., “purchase deed of house”) kept in the bank locker should be mandatorily recorded by the bank in the pass book / statement of saving etc. bank account of the locker holder.

Alternatively, a separate “Locker Account” like saving account etc. may be opened by the bank and entire inventory / details of items kept in the locker may be entered in pass book / statement of such separate locker account. In such case, there will not be any need for preparation of separate inventory / details as mentioned in the first step earlier (to avoid duplication). The separate locker account statement / passbook will itself serve as above inventory etc. The entries in the records should be reversed, updated etc. on addition, alteration, removal etc. made in the items kept in the locker.

Mandatory Obtaining of PAN of the Locker Holder & Filing Of Special Return By Bank (in Major Cases) : In cases, where no. of valuable items / weight / value thereof exceeds prescribed limit (i.e., in major cases), the bank should mandatorily obtain PAN of the locker holder. For major cases, the banks may also be required to file special returns to the Income Tax Department mentioning details of the items kept in the locker of the customer. Such details may appear in Form No. 26AS of the locker holder.

Grant Of Locker Facility Only After Intimation To The Concerned Government Department In Cases Where The Person Seeking Locker Facility Is In Government Employment : In cases where the locker facility is sought by the State / Central / Local Government employee or by his / her spouse or dependent relative, it should be allotted only after giving and acknowledged intimation thereof to the concerned government department where the person seeking locker facility is in employment.

Other Safeguards :

(1) The currency notes should not be permitted to be kept in the lockers. The bank should advise the locker holder to deposit them in their saving etc. bank account.

(2) A declaration should be obtained from the account holder that he is the sole / joint owner / custodian of the items kept. In case he is not the sole owner, the account holder should be mandatorily required to give details of the joint owners and beneficiaries etc. Such details should be mentioned in the above inventory / separate locker account records also.

(3) The confidential documents (not to be disclosed even before the bank officials) may be allowed to be kept in the locker without taking digital image and without including them in the inventory etc., only after due care and after obtaining legal permission etc.

(4) Migration towards new system should be in a phased manner. Initially the new procedure should be made applicable only to the allotment of new lockers. The old locker holders should be given sufficient time to migrate to the new system so as to avoid creation of any panic situation amongst the existing locker holders.

(5) Proper Arrangements For Safety, Confidentiality, Facilities etc. : (a) While implementing new system it should be seen that all the facilities regarding lockers as available presently (except disclosure to bank and authorities) should also be available in the new system. (b) The account holder should be capable to draw and deposit valuables as per his / her needs (though frequency may be limited to some reasonable limit like 12 times in a year etc.). (c) It should be ensured that the details of items kept in the lockers may not go in wrong hands. (d) There should not be any burden of additional cost / compliances in small cases. (e) In major cases, for additional safety of the valuable items etc. put in lockers, the customer may be advised to obtain insurance in respect thereof. (f) Since details of items kept in lockers will be known to the local bank branch employees, then apart from physical lock and key (key in a sealed envelope with locker holder’s signature), an additional code based lock facility may be provided to the locker holder (code for opening and locking may be generated directly by the bank’s central computer server and send on the locker holder’s mobile).

Conclusion: Due to strong transparency in bank locker system, the persons making tax evasions / earning money unethically may not be able to hide their black money in the bank lockers. Though there may be some slight additional work etc. burden on the bank staff and locker holders but the above measure may prove to be one of the effective step in removal of black money from Indian economy. In the initial years, it may also be possible that there may be some reduction in the number of persons seeking bank locker facility but it may not have any substantial adverse effect on the bank’s present earning level, as even presently the share of rental income from the lockers is very nominal in the entire income of the banks.

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  1. Satyabrata says:

    Dear Sir,

    We are not leaving in Iraq or Iran, neither Modiji can be compared to the likes of Saddam Hussain and Ayatollah Khomeini.

    Your suggestion is absurd, it will not pass the test of Law. Already one act of Demonetisation by the Government is being scrutinized by Supreme Court.

    It is outright violation of Fundamental Right of Privacy granted by Constitution.

  2. B N DHARMENDRA says:

    It is said very nice, this is known to every one. What is the guarentee that details will not reach the wrong hand, if you find a person responsible for misuse will you dimiss him and put the entire family photo in a public place highlithing the reason of corrupt. You will say law will take it own course….critical part is IT dept., Police Dept. is raiding the public to find the corrupt in the process of demonetisaiton. My question is, who is raiding the IT officials, Police officials, RTO officials, CA’s Advocates, Judges, Customs, Excise, film industry, including defence.. etc. do you think all those people are acting society responsible person! i dont think so, there are people in this circle culprits how is hand in glove with politicians. Due to few culprits the entire population is made to suffer. Unless stirct action is taken and made public without saying excuse on legal process. we the common public will suffer.

  3. Khaja Anwar Mohiuddin says:

    It is a good suggestion but the secrecy cannot be maintained. The suggestion to be analysed in a broader prospects-catch the culprits and save the innocent. When locker is allotted to the customer- in addition to his identity etc-income tax returns, property details, source of income to be obtained.

  4. Kishorkumar Ved says:

    If at all, suggestions presented hereinabove are implemented, will Bankers be responsible to reimburse locker holders for the loss incurred due to damage, theft or missing items due to act of God/natural calamities or acts of humanbeing like theft etc..?

  5. Deepak Dang says:

    This suggestion is impractical. Dealing with such locker will require a lot of time & energy of bank staff & party. It is better that there should be self-declaration.

  6. ARUN MITTAL says:

    This is down right stupid suggestion. It means complete and total violation of privacy of a citizen.

    Next you will be required to declare inventory list of all household items and then kitchen & grocery.. Where are we heading ?. A dictatorial and a non democratic country.?

    I am appalled that a person of the author’s caliber can even think in these terms.

  7. Anil says:

    Seems quite funny. In case you go back to the history of utilization of a bank locker, you might come across on the facts that a single locker might be having Mother’s belonging / daughter’s belongings and son’s belonging’s also in addition to many more family member’s depending on the size of the family. Which rules out your cooked idea on curbing Black money from lockers. Your idea is in desperation.

    Further, the basic idea behind having a locker is to keep valuables with faith of being secured while maintaining secrecy also.

    Does the declaration by an individual extends a facility by the bank covering asset insurance in case of any appropriation by the bankers (hypothetical situation) or in case of any bank robbery or in any natural disaster situation.

    Would that not attract miscreant minds of bank staff (permanent / Temporary) of wrong doings with specific lockers containing huge but, declared valuables ?? since, they would be aware of lockers to be targeted for getting good amount of Looted booty in case chance comes.

    Just a hypothetical thought in reply to your thought of going about with bank lockers used for Black money.

    Your comments would be awaited.

  8. MKHARSH says:

    In a Democratic set-up, the authors suggestion are just simply hallucinatory and dictatorial and completely removing the basics of our constitutional rights. It is already in the system to declare the wealth. Black money does not remain in lockers one must understand.
    Just wait for effect of demonetisation, the unemployment would increase dramatically and chaos would be there as in India there are almost 70% public live in village.
    India is still developing country not the developed country as secured as in foreign country. Which country has introduced such system.

  9. nair says:

    Author has lost his mind ? it is like intruding in the bedroom …do you know that ? Total non-sense. Does author know the need to achieve balance between Tax Compliance & privacy / practicality. Can author guarantee that tomorrow bank officials will not blackmail locker holders ? And with each change in the locker contents IT dept / bank has to be involved ? Then you can go further & say we should raid all houses in the country, because locker holder may shift the MAAL to his home & surrender the lokcker….etc etc I want to write too many things but fade up od typing

  10. v k jain, CA says:

    Alternatively, it should be added mandatorily in return filing all the wealth lying in locker. people will declare suo moto if they fear that evantually bank people will furnish all locker info to income tax department.

  11. Hemant Agarwal says:

    In a Democratic set-up, the authors suggestion are just simply hallucinatory and dictatorial.
    As well the Bank Locker facility should be discontinued and removed.
    Not even 1% of Indian people have Bank Locker facility.
    People can circumvent the above and as well keep Safe Vaults inside their houses, more so now with the advent of CCTV and other electronic security facilities.

    Whatever Black Money is being propogated about is already stashed in Foreign countries. Ordinary Indians are struggling for their proper meals and cannot have Black Money.

    Keep Smiling …. Hemant Agarwal

  12. Rakesh Chitkara says:

    Idea of having transparent (see through) lockers with full proof safety is also laudable and will go a long way in curbing unaccounted wealth. As a matter of fact, CCTV should be installed inside every locker which can be seen and monitored at the Income Tax offices. My full support to the Ld. author to his sense of patriotism and transparency.

  13. Rakesh Chitkara says:

    Which other country has followed the system suggested by the Learned Author ? To launch a new system, one must always benefit from the experiences and lessons learnt by other countries. And whether Bank staff would provide the facility of appraisal of gold content and valuation of the jewelry?

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