Did you know? Bank's liability is 100 times annual rent of a locker

Bank branch that has run out of lockers must put you on a waiting list

The Reserve Bank of India (RBI) has now set December 31, 2023 as the final deadline for the renewal of bank locker agreements with existing customers. The earlier deadline was January 1. Banks are urging their customers to complete this formality much before the deadline. The State Bank of India and Bank of Baroda have released advisories urging locker holders to sign their revised contracts by June 30.

Here are a few key things customers, including potential ones, should know about bank lockers.

Existing relationship not mandatory

Even if you don’t have an existing relationship with a bank, you can still make a request for starting a locker account. Adhil Shetty, chief executive officer (CEO), says, “It is not mandatory to have an existing banking relationship with a bank, including a banking account, to avail of its locker facility.” However, it is obligatory to complete all the necessary Know Your Customer (KYC) documentation.

Tackling availability issues  

According to an RBI circular (August 18, 2021), if a branch doesn’t have lockers available, it must acknowledge a customer’s application, place her on a waiting list, and provide her with a waitlist number.

While most banks, especially public sector ones, offer locker facilities, they may not do so at every branch. M. Barve, founder, MB Wealth Financial Solutions, says, “Locker availability varies across centres. Some places may have a longer waiting period than others.” He suggests checking the bank’s website for locker availability across branches. If you desperately need a locker, be flexible regarding the location. The chances of getting a locker may be higher at a relatively new private-sector bank, than at an old public-sector one.

Fixed deposit requirement  

While many banks may insist that you open a fixed deposit (FD) account, the RBI circular forbids banks from tying locker facilities to the placement of FD or any other deposit beyond what the RBI specifically allows. Jay Thacker, member, Association of Registered Investment Advisors (ARIA), says, “To ensure prompt payment of locker rent, banks are allowed to obtain a term deposit at the time of locker allotment for an amount that would cover three years of rent and the cost of breaking open the locker in case such an eventuality arises.”

Banks’ limited liability

Banks have a ‘duty of care’ to prevent any loss due to their negligence. Shetty says, “In case of events like theft, burglary, fire, fraud by an employee, robbery, building collapse, etc., the bank’s liability shall be for an amount equivalent to 100 times the annual rent of the safe deposit locker.”

However, in the case of a natural disaster (earthquake, flood, thunderstorm, lightning, etc.) or customer negligence, the bank is not liable for any damage or loss of contents. All they need to do is take appropriate care to protect the locker systems in their premises from such catastrophes.

Insure locker contents  

Not every high-value item can be secured in a bank locker. Tarun Mathur, chief business officer, general insurance, Policybazaar.com, says, “One must therefore buy adequate home insurance to protect valuables like electronic items, expensive furniture, etc.” 

Most home insurance policies usually do not extend to the contents of a bank locker. Hence, customers need to buy a specific policy that covers valuables kept in a bank locker. Kapil Mehta, co-founder, SecureNow, says, “Household insurance that provides cover for jewellery stored in a bank locker is available at a low cost, as the risk of jewellery getting stolen from a bank locker is very low.”

Appoint a nominee

Barve advises appointing a nominee to ensure a smooth transfer of locker contents in case of the holder’s death. Banks follow certain procedures and conduct due diligence to ensure that the locker contents go to the nominee. Barve also encourages customers to update nomination details following significant life changes, such as moving from married to divorced status.

Locker nomination protocols

• If a sole locker hirer nominates an individual, in case of his death, the bank will, after due diligence, give the nominee access to the locker
• In case the locker was hired jointly, in the event of the death of any of the hirers, the bank will give access to the locker to the survivor(s) and the nominee(s)
• If joint locker was rented under a survivorship clause — ‘either or survivor’, ‘anyone or survivor’, ‘former or survivor’, etc.— then in the event of one hirer’s death, the bank will grant access to the survivor(s), according to terms of survivorship clause
• Besides access, liberty is also given to remove the contents of the locker