the story So Far: In order to enhance the security, transparency and effective management of safe deposit lockers provided by banks, apex banking regulator Reserve Bank of India (RBI) released a list of revised guidelines, which came into effect from January 1, 2022. Both new and existing safe deposit lockers and bank facilities for safe custody of articles. In compliance of the same, banks were required to renew the agreements with their existing locker users by January 1, 2023. The guidelines follow the observations made by the Supreme Court in A. Amitabh Dasgupta Vs United Bank Of India (February 2021).
What changes for banks?
The provisions include ensuring the security of the locker, its management, rent collection and verification for transfer or disclosure of contents.
Now, while allotting a locker, banks have to enter into an agreement with the customer on a duly stamped paper, a copy of which is provided to both the parties. The terms of the contract should not be “more onerous than may be necessary in the ordinary course of business to protect the interests of the bank”.
Banks will now allow a consumer to obtain a ‘term deposit’ at the time of allotment, which will cover three years’ rent and charges for opening a locker, in case the hirer does not operate it or pay the rent. However, banks cannot demand ‘fixed deposits’ from existing locker holders or those who have a “satisfactory operative account”. The central idea here is to ensure prompt payment of locker rent.
In case of merger, closure or relocation of a branch requiring physical relocation of lockers, banks are required to give notice in two newspapers and inform customers at least two months in advance, as well as facilitate Option to change or close is also given. Further, if locker rent is charged in advance, the customer will have to refund the proportionate amount on surrender of the account.
The locker agreements should make it clear that the bank does not keep any record of the contents of the locker and it is not under any obligation to insure the contents of the locker against any risk. Additionally, banks may not offer insurance products to customers to insure locker contents.
What Happens When Law Enforcement Agencies Get Involved?
Banks are required to keep the entry, exit and premises of the locker room under CCTV surveillance and maintain the recording for at least 180 days. However, in case of complaints such as locker opening without knowledge (or authority), theft or security breach, the recording should be retained till the conclusion of the investigation and resolution of the dispute.
Once it confirms the orders and documents received for attachment and recovery of contents in its possession, the bank is required to inform the locker owner about the same through SMS/email and a letter. The bank has to prepare an inventory of the material in the presence of the officials, two independent witnesses and an official of the bank. The entire process should be videographed.
What are the important observations for the customers?
Banks should take security measures to protect lockers operated through electronic systems from any breach. They should also devise a standard operating procedure for issuing new passwords in case they are lost or forgotten by customers.
The customers should inform the Bank immediately in case of loss of the locker key and give an undertaking to hand over the key to the Bank on receipt of the key in future. All necessary expenses are borne by the customer.
For regular management of the locker, the identity of the customer or the authorized entity has to be verified and authorization recorded by the bank officials before access is granted. Banks are required to send an email and SMS to inform the customer about any activity related to the locker.
It is the responsibility of the Custodian of the Bank to check whether the lockers are properly closed after access and whether the locker premises are empty at the end of the day.
Banks reserve the discretion to demolish the locker if the rent remains unpaid for three consecutive years. However, they must inform the user through a letter, email and SMS, and provide a ‘reasonable opportunity’ to withdraw the submitted material. The locker should be broken open in the presence of a bank official and two independent witnesses and the entire process should be taped. The idea is to collect evidence in case of any dispute or court case in future.
Thereafter, the material should be kept in a sealed envelope with the detailed list inside a fireproof safe in a tamper-proof manner, after signing an acknowledgment, until the customer makes a claim.
What about transfer of lockers?
Banks should formulate a policy to enroll and release the safety lockers and their contents to the nominee within 15 days from the date of receipt of the claim.
Before granting access, banks should establish the identity of the survivor (or nominee) and the fact of death with proper documentary evidence. It should also check whether there are any orders or directions from the courts or any other forum preventing access to the locker.
Banks should not insist on production of succession certificate, letter of administration or probate or any bond of indemnity or surety, unless there is a discrepancy.
what happened in Amitabh Dasgupta Vs United Bank Of India,
Amitabh Dasgupta, a customer of Union Bank, submitted that the lender bank illegally opened his locker, falsely claiming that he had not paid dues between 1993-94. The chief manager of the bank accepted that there was no dues and apologized for opening the locker.
When Mr Dasgupta later went to collect the contents of his locker, he found only two of the seven ornaments deposited in the locker in unsealed envelopes.
The Supreme Court in its judgment observed that “the imposition of liability on the bank in respect of the contents of the locker is dependent on the provision in a civil suit for such purpose and an appreciation of the evidence”. It added that this does not mean that the appellant should be left without any remedy.
Separately, it said the earlier existing rules on locker management were “inadequate and muddled” without uniformity in rules.
Additionally, it highlighted that there has been an increased reliance on banks for the safety of assets, as technological advancements and emerging globalization have made people reluctant to hold liquid assets at home. Therefore it urged the RBI to lay down comprehensive guidelines for locker facility and safe deposit management.