Reserve Bank of India, taking into consideration the various developments in the area of banking and technology, the nature of consumer grievances, and other stakeholders, has reviewed the guidelines/instructions issued on locker rent agreements and issued a circular on August 18, 2021, in this regard.
‘The review also took into account, the principles enumerated by the Hon’ble Supreme Court in ‘Amitabha Dasgupta vs United Bank of India’, (Judgment dated February 19, 2021, in CA No. 3966 of 2010)’ said RBI.
These regulations in terms of the RBI circular of August 18, 2021, were applicable to new customers from January last year. RBI had issued revised instructions with respect to the Safe Deposit Locker/Safe Custody Article Facility that inter alia required banks to enter into revised agreements. The central bank has asked the banks to put in place board-approved agreements with customers for safe deposit lockers and allowed them to adopt a model locker agreement framed by the Indian Banks’ Association (IBA). These regulations of RBI were applicable to new customers from January last year. The existing locker holders are allowed to sign the new agreement by January 1, 2023.
Difficulties faced by Bank Customers:
There are some issues that customers are facing. “Firstly, some of the customers in semi-urban branches are finding it difficult to get stamp paper, especially in the areas where there is no provision for e-stamp paper. Secondly, it’s difficult for the NRIs to get the new agreement signed before the deadline. Customers have also complained about the value of stamp paper required for the agreement and whether banks will provide these. Many customers complained they were asking customers to get it themselves. People have also complained about the divergence in the value of the stamp paper required for agreement renewal. The State Bank of India (SBI) clarified in a tweet on January 2 that the value of the stamp paper differed depending on the Stamp Acts of the respective states.
It has come to the notice of RBI that a large number of customers are yet to sign the revised agreement. In view of the same, the Central Bank has extended the deadline for banks to complete the process of renewal of agreements for the existing safe deposit lockers in a phased manner by December 31, 2023, with intermediate milestones of 50 percent by June 30, 2023, and 75 percent by September 30, 2023. Further, banks have been advised to make necessary arrangements to facilitate the execution of the revised agreements by ensuring the availability of stamp papers, etc.
Key operational guidelines of revised locker rent agreements:
- Know Your Customer (KYC) Directions, 2016 (as updated from time to time) may be given the facilities of safe deposit lockers/ safe custody article subject to ongoing compliance.
- Customers who are not having any other banking relationship with the bank may be given the facilities of a safe deposit locker / safe custody article after complying with the CDD criteria under the latest Know Your Customer (KYC) Directions.
- Banks shall incorporate a clause in the locker agreement that the locker-hirer/s shall not keep anything illegal or any hazardous substances inside the locker. If the bank suspects the customer kept hazardous items inside the locker, the bank shall have the right to take appropriate action against such customer as it deems fit and proper in the circumstances.
- The banks shall obtain recent passport-size photographs of locker-hirer(s) and individual(s) authorized by locker hirer(s) to operate the locker and preserve the records pertaining to the locker-hirer being maintained in the bank’s branch.
- Banks shall maintain a branch-wise list of vacant lockers as well as a waitlist in the Core Banking System (CBS) or any other computerized system compliant with the Cyber Security Framework issued by RBI, for the purpose of allotment of lockers and ensure transparency in the allotment of lockers. The banks shall acknowledge the receipt of all applications for allotment of lockers and provide a wait list number to the customers if the lockers are not available for allotment.
- A copy of the locker agreement in duplicate signed by both parties shall be furnished to the locker hirer to know his/her rights and responsibilities. The original Agreement shall be retained with the bank’s branch where the locker is situated.
- To ensure prompt payment of locker rent, banks are allowed to obtain a Term Deposit, at the time of allotment, which would cover three years’ rent and the charges for breaking open the locker in case of such eventuality (For allotment of locker facility with the placement of term deposits beyond what is specifically permitted above will be considered as a restrictive practice). Banks, however, shall not insist on such Term Deposits from the existing locker holders or those who have satisfactory operative accounts.
- If locker rent is collected in advance, in the event of the surrender of a locker by a customer, the proportionate amount of advance rent collected shall be refunded to the customer.
- Banks shall have a single defined point of entry and exit to the locker room/vault. The place where the lockers are housed must be secured enough to protect against the hazard of rain/flood water entering and damaging the lockers in contingent situations. The fire hazard risks of the area should also be assessed and minimized. The area housing the lockers should remain adequately guarded at all times. The banks shall install Access Control System if required as per their risk assessment, which would restrict any unauthorized entry and create a digital record of access to the locker room with a time log. As per their internal security policy, banks may cover the entry and exit of the strong room and the common areas of operation under CCTV cameras and preserve its recording for a period of not less than 180 days.
- All the new mechanical lockers to be installed by the banks shall conform to basic standards / enhanced industry standards. In case the lockers are being operated through an electronic system, the bank shall take reasonable steps to ensure that the system is protected against hacking or any breach of security. The customers’ personal data, including their biometric data, shall not be shared with third parties without their consent.
- Banks shall send an email and SMS alert to the registered email ID and mobile number of the customer before the end of the day as a positive confirmation intimating the date and time of the locker operation and the redressal mechanism available in case of unauthorized locker access.
- A clause may also be incorporated in the locker agreement to discharge the bank from liability in case the locker is not in operation and the locker is opened by the bank and contents are released to non-payment of locker rent or as per law and as per the instructions issued by the Reserve Bank and the terms and conditions prescribed in the agreement. Banks shall also record a video of the break-open process and the inventory assessment, wherever legally permissible, and preserve the video to produce as evidence in case of any dispute or Court or fraud case in the future.
- Banks shall settle the claims in respect of deceased locker hirers and shall release contents of the locker to the survivor(s) / nominee(s), as the case may be, within a period not exceeding 15 days from the date of receipt of the claimed subject to the production of proof of death of the depositor and suitable identification of the claimant(s) with reference to the nomination, to the bank’s satisfaction. While giving access to the survivor(s) / nominee(s) of the deceased locker hirer/depositor of the safe custody articles, banks may avoid insisting on the production of succession certificate, letter of administration or probate, etc., or obtain any bond of indemnity or surety from the survivor(s)/nominee(s), unless there is any discrepancy in nomination.
- The bank shall not be liable for any damage and/or loss of contents of the locker arising from natural calamities or Acts of God like earthquakes, floods, lightning, and thunderstorm or any act that is attributable to the sole fault or negligence of the customer. Banks shall, however, exercise appropriate care to their locker systems to protect their premises from such catastrophes.
- However, it is the responsibility of banks to take all steps for the safety and security of the premises in which the safe deposit vaults are housed. It has the responsibility to ensure that incidents like fire, theft/ burglary/ robbery, dacoity, and building collapse do not occur in the bank’s premises due to its own shortcomings, negligence, and by any act of omission/commission. As banks cannot claim that they bear no liability towards their customers for the loss of contents of the locker, in instances where the loss of contents of the locker is due to incidents mentioned above or attributable to fraud committed by its employee(s), the banks’ liability shall be for an amount equivalent to one hundred times the prevailing annual rent of the safe deposit locker.