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Why is the Reserve Bank of India(RBI) asking customers to sign a new bank locker agreement? What changes will it bring?
It started with a 2021 Supreme Court order that laid the basis for determining the responsibilities and liabilities of banks and their locker users. Post the judgment, the RBI revisited the rules on safe deposit lockers. Initially these rules were slated to come into force by January 1, 2022, which was later postponed to January 1, 2023, and then again to December 31.
Under the old norms, banks assumed the role of a custodian of the locker — namely, although the articles in the locker didn’t belong to the bank, it had a larger liability in the event of any damage to the stored articles. Now, the relationship between the bank and the locker user is that of a lessor and lessee. The bank gives its customer the right to use the locker space, provided it is not misused.
The new regulations also define what can be stored (jewellery and documents) and what cannot be stored (such as hoarded cash and arms, among others); the user would be held responsible for any violation of these rules.
Will this agreement be advantageous to customers?
While a plain reading may suggest that the new rules absolve banks of responsibility, that’s not quite the case. Apart from the user taking complete responsibility for the contents of the locker, including the loss or theft of the operational locker key due to the user’s negligence, the onus is on the banks to ensure the basic safety of the locker. For instance, the liability of a bank towards a loss faced by the user due to the bank’s negligence may be up to 100 times the prevailing annual locker rent. However, it is not liable to pay compensation for loss due to natural calamities or acts of God such as earthquakes or floods.
More importantly, the new rules are a step towards increasing transparency to the benefit of the user. Just like with housing loan, users (new and existing) will sign a locker agreement with the bank on stamp paper. The cost of documentation will be borne by the bank and a copy of the document must be shared with the user. The document will include details of the rights and duties of the user and bank, locker rent, escalation clause, and so on.
What is the deadline for the agreement?
The new agreements will have to be in place by December 31, 2023. However, by June 30 and September 30, 50 per cent and 75 per cent, respectively, of existing customers should have signed.
Will the new agreement allow banks to inspect the contents of a client’s locker?
No, the bank will not inspect the contents of the locker unless there are grounds to believe that the client is storing articles disallowed under the regulations. Even then, the locker can be opened only in the presence of the client.
Will there be a hike in the annual locker charge?
Locker charges have always been decided at the discretion of the banks and will remain so. Apart from codifying the rights and liabilities of both parties, the new regulations have changed nothing that could necessitate higher fees. However, banks usually pass on all costs to the customer; so, while the new rules stipulate that banks should bear the documentation cost, it remains to be seen whether they will do so.
Do first-time users of bank lockers also have to sign the agreement?
Yes. The revised norms apply to existing and new users from December 31, 2023.
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