Locker items lost, damaged or stolen: How much are banks liable for?

With gold prices at a record high, many Indian households assume that jewellery stored in bank lockers is fully protected. Legally, that assumption is flawed. RBI rules cap what banks must pay if locker contents are lost, damaged or stolen, and the gap between protection and reality can be wide, experts warn.

 

What banks are actually liable for?

Under RBI’s locker framework, a bank’s liability is limited to 100 times the annual locker rent, and only in cases involving negligence, fire, theft, burglary, or fraud by bank staff. If your annual rent is Rs 3,000, the maximum compensation is Rs 3 lakh.

 

Disputes are not routine, but they recur often enough to raise concern, said Tushar Kumar, advocate, Supreme Court of India. Such cases usually arise during forced locker break-ins, branch renovations, fires, or employee misconduct. The bigger problem, he said, is evidence- customers must prove both bank negligence and what exactly was inside the locker.

 

Grahita Agarwal, senior associate at B. Shanker Advocates LLP, added that when disputes arise, they are usually high-value and emotionally charged. “The RBI cap often covers barely 20–30 per cent of the jewellery’s real value, and litigation is often the only route to meaningful compensation,” she said.

 

Why are most lockers underprotected?

Experts say households underestimate the mismatch between locker-linked compensation and jewellery value. The correct comparison is simple- calculate 100x annual rent, then compare it with the current market value of gold, stones, and making charges.

 

At today’s prices, even a modest family locker can hold jewellery worth Rs 10 lakh– Rs 20 lakh, noted Vishmadev Parida, head of techno support at Square Insurance. “Locker protection is symbolic, not real,” he said.

 

Can jewellery in lockers be insured?

Banks do not insure locker contents. Customers must buy separate jewellery insurance, either standalone or as a home insurance add-on.

 

Premiums are not prohibitive. According to Rohit Jain, managing partner at Singhania & Co., jewellery insurance typically costs 0.5–1.2 per cent of the insured value annually. Anooj Mehta’s point was echoed by several experts: the biggest mistakes are underinsuring, using outdated valuations, and ignoring exclusions such as mysterious disappearance.

 

Soumya Shukla, executive partner at ElpeeCo, cautioned that jewellery is never automatically covered under home insurance. “Unless it is specifically declared and endorsed, claims can fail,” she said.

 

Choosing the right option

No single solution fits all. Soayib Qureshi, partner at PSL Advocates & Solicitors, said bank lockers remain among the safest physical storage options, but they do not offer full financial protection. Home storage can work with strong security and insurance, while gold loans or overdrafts are liquidity tools, not preservation strategies.

 

For heirloom jewellery, most experts agree on a layered approach, bank locker plus dedicated jewellery insurance, backed by updated valuation records. As Kumar puts it, sentiment carries no weight in law, only documentation does.