- In order to enhance the safety, transparency and effective management of safe deposit lockers provided by banks, apex banking regulator Reserve Bank of India (RBI) released a list of revised guidelines, which came into force from January 1, 2022.
- The guidelines followed observations made by the Supreme Court in Amitabha Dasgupta vs United Bank of India (February 2021). The agreements with existing customers were to be renewed by January 1, 2023.
What changes for banks?
- Now, while allotting lockers, banks have to enter into an agreement with the customer on duly stamped paper, with a copy being provided to both parties.
- The terms of the contract must not be “more onerous than required in the ordinary course of business to safeguard the interests of the bank”.
- The provisions entail ensuring the safety of the locker, its management, rent collection and verification for transfer or revealing the contents.
- Banks would now be allowed to obtain a ‘term deposit’ at the time of allotment to a consumer. It would cover three years’ rent and the charges for breaking open a locker should the locker-hirer neither operate it nor pay rent.
- The central idea here is to ensure the prompt payment of locker rent. In the event of a merger, closure or shifting of a branch that would require physical relocation of lockers, the banks would be required to give notices in at least two newspapers with customers intimated at least two months in advance along with the option to change or close the facility.
- Further, if the locker rent is collected in advance, the proportionate amount would require to be refunded to the customer should s/he surrender the account.
- Banks would not be under any liability to insure the contents of the locker against any risk whatsoever. Additionally, under no circumstances can it offer insurance products to its customers for insuring the contents.
What is new for customers?
- For lockers operated through an electronic system, the bank must institute measures to safeguard it against any breach of security.
- It must also devise a standard operating procedure for issuing a new password should the customers have lost or forgotten them. Customers must also inform the bank immediately if they lose the locker key.
- Banks would reserve the discretion to break open the locker with regards to due procedure if the rent stands pending for three years in a row.
- They must however inform the user and accord him ‘reasonable opportunity’ to withdraw the deposited contents.
- The break-open process would take place in the presence of a bank officer and two independent witnesses and the entire process needs to be taped. The idea is to collect evidence in case of any dispute or in the future.
What happened in the Amitabha Dasgupta case?
- Union Bank customer Amitabha Dasgupta submitted that the lender broke his locker illegally citing an incorrect assertion that he had not paid dues between 1993-94.
- The Chief Manager of the bank admitted to having incorrectly broken the locker and apologised for the same. When Mr. Dasgupta went to the collect the contents of the locker later, he could find only two of the seven ornaments that had been deposited in the locker in a non-sealed envelope.
- In its verdict the Court noted that “imposition of liability upon the bank with respect to the contents of the locker is dependent upon provision and appreciation of evidence in a civil suit for such purpose”.
- While the SC eventually ordered the lender to compensate Mr. Dasgupta, it separately added that the existing regulations on locker management were “inadequate and muddled” with no uniformity in rules.
SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB