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.