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Unlocking the Secrets: Safeguarding Your valuables with RBI’s Safe Deposit Locker Guidelines

Safe deposit lockers offered by banks are an excellent way for customers to securely store their valuable belongings. The Reserve Bank of India (RBI) has issued guidelines and instructions to ensure the safety and convenience of customers utilizing these facilities..

The RBI vide its circular DOR.LEG.REC/40/09.07.005/2021-22 dated August 18, 2021 had released updated guidelines for the safe deposit locker/ safe custody article facility. Among others, it required banks to engage into updated contracts with current locker holders by 1st January, 2023. However ,it has come to the notice of RBI that a huge number of customer are yet to sign the renewal agreement and in many cases banks are yet to inform the customer about the need to do so. Considering this the RBI has extended this deadline to 31st December, 2023 vide Notification No. RBI/2022-23/168 dated 23rd January, 2023. The banks have started communicating customers about the need of renewal of their locker agreements and the customers may also contact the bank branch in this regard.

This article provides the key aspects of safe deposit lockers as per RBI circulars and instructions:

Model Locker Agreement

As per the guidelines, 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 paper duly stamped. A copy of the locker agreement in duplicate signed by both the parties shall be furnished to the customer to know his/her rights and responsibilities. Original agreement shall be retained with the bank branch where the locker is situated.

Acceptance of Term Deposits as security

Banks may face potential situations where the locker hirer neither operates the lockers nor pays the rent. To ensure prompt payment of locker rent, banks are allowed to obtain a Term Deposit at the time of allotment, which would cover three year’s rent and the charges for breaking open the locker in case of such eventuality. Banks shall, however, not insist on such Term deposits from the existing locker holders or those who have satisfactory operative account.

Nomination

Customers must use the facility of nomination. This allows them to nominate a nominee who can access the locker in the event of the customer’s demise, simplifying the process for legal heirs. In case the nominee is a minor the same procedure as prescribed to the bank account shall be followed by the banks.

Insurance of locker contents by the customer

Banks do not keep a record of the contents of the locker or of any articles removed therefrom or placed therein by the customer. Hence banks are not liable to insure the contents of the locker against any risk whatsoever. Hence, the customers should on their own take proper insurance coverage for the valuables with insurance companies.

Bank’s liability limited to 100 times of the locker rent

The bank’s liability is for an amount equivalent to one hundred times the prevailing annual rent of the safe deposit locker if the loss is caused due to the events like fire, theft, burglary, dacoity , robbery, building collapse or in case of fraud committed by the employees of the bank.

Banks not liable for loss due to natural calamities or sole fault or negligence of the customer 

The bank shall not be liable for any damage and/or loss of contents of locker arising from natural calamities or Act of God like earthquake, floods, lighting, and thunderstorms or any act that is attributable to the sole fault or negligence of the customer. Bank shall, however, exercise appropriate care to their locker systems to protect their premises from such catastrophes..

What is not permitted to be kept in the locker

Keeping of anything illegal or any hazardous substances in the safe deposit locker are not permitted. While documents and valuables such as jewellery can be stored in lockers, cash, weapons, hazardous substances or narcotics are not permitted. If the bank suspects the deposit of any illegal or hazardous substance by any customer in the locker, the bank shall have the right to take appropriate action against such customer as it deem fit and proper in the circumstances.

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

Banks shall have the discretion to break open any locker following due procedure if the rent has not been paid by the customer for three year in a row. The bank shall ensure to notify the existing locker hirer prior to any changes in the allotment and give him/her reasonable opportunity to withdraw the article deposited by him/her.

Discharge of locker contents in case of loss of key by the customer

If the key of the buyer, supplied by the bank, is lost by the customer, the customer shall notify the bank immediately. An undertaking may also be obtained from the customer that the key lost, if found in future, will be handed over to the bank. All charges for opening of the locker, changing the lock and replacing the lost key may be recovered from the customer.

Time limit for settlement of claims

Banks shall 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 productions of proof of death of the depositor and suitable identification of the claimant(s) with reference to nomination, to the bank’s satisfaction.

Conclusion

Banks have started sending communications to locker holders about the requirement to execute the model locker agreement. It is advised that locker holders should renew/execute their contracts before the deadline of 31st December, 2023 and obtain a copy of their agreement to know about their rights and responsibilities and follow them in letter and spirit. Adhering to the RBI’s instructions, banks will ensure a safe and reliable storage solution, fostering trust and confidence among their customers.

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past chairman of Dibrugarh Branch of EIRC of ICAI View Full Profile

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