Cap on term deposit while opening bank locker will end arbitrariness

Your bank will bear limited liability for the contents of your locker, so buy insurance

The Reserve Bank of India (RBI) has issued revised guidelines on how banks should operate their safe deposit lockers. The new provisions are expected to enhance transparency for customers.
 
Method to locker allotment
 
Banks will have to maintain a branch-wise list of vacant lockers and a waitlist of customers who want lockers. “With a centralised repository, customers will be able to know whether lockers are available in their home branch or other branches, and take informed decisions,” says Adhil Shetty, chief executive officer, Bankbazaar.com.
 
When a customer applies, the bank will have to provide him with a waitlist number. This will curtail out-of-turn allotments.
 
Limit set on term deposits
 
Banks often ask customers to start a term deposit at the time of opening a locker. “As lockers are not easily available, customers approach new banks just for them. As these are new customers, it does not know much about their financial habits. As a precaution, it demands a term deposit as security against locker fees,” says Shetty.

Until now, banks had a free hand regarding the size of the term deposit. The RBI has now capped the amount at three years’ rent. The State Bank of India’s annual rent for lockers ranges from Rs 1,500-12,000. Assuming it is Rs 12,000, the term deposit cannot exceed Rs 36,000.
 
The RBI has warned that packaging locker facility allotment with placement of term deposits beyond this limit will be treated as a restrictive practice.
 
Bank’s liability defined
 
In case of loss of contents of the locker due to fire, theft, burglary, robbery, dacoity, building collapse, or fraud by a bank employee, the bank will have to bear liability towards its customers. However, the RBI has limited it to 100 times the locker’s annual rent.
 
Says Deepesh Raghaw, founder, PersonalFinancePlan, a Securities and Exchange Board of India-registered investment advisor: “Where the rent is low, the bank’s liability may seem small. Remember the bank does not have knowledge of a locker’s contents—whether it has jewellery or just papers. It cannot assess the value of the contents and give fair compensation. The good thing is that the RBI has placed at least some liability on banks.”
 
Banks will, however, not be liable for losses arising from natural calamities.
 
If a bank customer keeps high-value items in his locker, he should consider buying an insurance cover. At the same time, if a bank tries to sell an insurance cover for your locker, be warned: The RBI’s circular prohibits this.
 
Get nomination right
 
Banks will have to expedite the release of a locker’s contents to the survivor or nominee. The RBI has imposed a limit of 15 days from the date of receipt of the claim.
 
“If you want your heirs to have seamless access to the locker after you are gone, appoint a nominee and meet all the bank’s requirements correctly in this regard,” says Meghna Mishra, partner, Karanjawala & Co.
 
In the absence of a nominee, and assuming the locker was operated by one person, the bank could ask for probate for a Will, a legal heir or succession certificate, etc. “It could be a long-drawn process before your legal heirs are able to access the locker,” says Mishra.

 
A couple that operates a locker jointly may do so on ‘either or survivor’ basis. Even if one of them passes away, the other would still have access to the locker. However, sometimes both the spouses pass away simultaneously. So, it is better to allow access to more than two people. “The ‘anyone or survivor’ option is useful. The ‘anyone’ could be a major child, a son- or daughter-in-law,” says Mishra.