We trust that many of our valued bl.portfolio readers have promptly taken the necessary steps by signing and submitting the updated bank locker agreement before December 31, 2023, following our timely advisory last month. However, according to a news report, 10-20 per cent of bank locker customers have yet to upload the revised agreement.

It’s crucial to highlight that the RBI has not extended the deadline this time. For those who delayed this vital task, hoping for another deadline extension, it’s important to act now before the bank freezes access to your locker. Here is a lowdown on the essential aspects and key changes of the revised bank locker agreement.

What has changed?

In our edition dated December 24, 2023, we elucidated the rationale behind the Reserve Bank of India’s directive for customers to sign a new bank agreement. The new agreement mandates banks to include a distinct clause specifying allowable storage items — primarily jewellery and documents — while explicitly forbidding illegal items such as hoarded cash, firearms, and so on. While the user is fully accountable for locker contents, encompassing potential loss or theft of the operational key due to their negligence, banks are also responsible for ensuring basic locker safety. It should be noted that the previous agreement lacked clarity on the bank’s liability.

So, the new regulations have redefined the bank’s accountability in cases of negligence, potentially increasing liability up to one hundred times the prevailing annual locker rent for losses due to incidents such as robbery, fire accidents, or employee fraud. However, it’s essential to note that the bank is exempt from compensating losses arising from natural disasters such as earthquakes or floods, categorised as “Acts of God”.  

Meanwhile, RBI has extended the grace period for inoperative lockers from three to seven years. The bank reserves the right to forcibly open the locker after providing notice in the following scenarios: if rent hasn’t been paid for three consecutive years, if the locker remains unused for seven years despite rent payments, or if mandated by the law enforcement authority.

As we generally worry about the security of our belongings in a bank locker, the notion of locker insurance may have crossed our minds. However, the reality is that banks lack the jurisdiction to assess locker contents, leaving them without any obligation to provide insurance coverage for your items, regardless of the risks involved. To sum it up, new rules are a step towards increasing transparency to the benefit of the user.

Requirements

Individuals seeking bank locker services will need to establish a fixed or term deposit as collateral with their respective banks upon locker allocation. This deposit aims to cover three years’ worth of rent and associated charges for breaking open the lock in the event of non-payment. Existing locker holders or those maintaining satisfactory operative accounts may be exempted from this deposit requirement.

Additionally, individuals acquiring new lockers will be responsible for covering the expenses related to stamp papers required for executing a fresh locker agreement. Moreover, a documented copy of the executed agreement will be provided to the locker hirer, encompassing specifics regarding the user’s and bank’s rights and obligations, locker rent, escalation clauses, and related terms.

The annual rent for lockers will be contingent upon their size and the branch’s location, subject to periodic adjustments. Prospective renters are advised to review the safe deposit locker charges online before visiting the branch, to ensure making informed decisions. It’s crucial to note that several public sector undertaking (PSU) banks, including State Bank of India, Canara Bank, Punjab National Bank, and Union Bank of India, have limited locker usage up to twelve times per annum. Subsequently, a minimum charge of ₹118 (inclusive of 18 per cent GST) per locker visit will apply beyond this threshold. While most of the private sector banks have not imposed any restriction on usage, Axis Bank and Federal Bank stand out compared to PSU banks by offering more than 12 free locker visits per year.

Nomination and settlement

The nomination part of the new agreement remains unchanged compared to the old agreement. Banks, as usual, will continue to offer nomination facilities for sole and joint locker hirers. In case of a hirer’s demise, the bank can grant access to the locker and permit joint removal of contents to the survivors and nominees. If no nomination or survivorship clause exists, banks must grant access to the legal heir or representative of a deceased locker hirer after conducting due diligence in confirming the identities of the legal heirs.

In the new agreement, the RBI has intricately defined the procedure for banks to manage claims and release the contents of a safe deposit locker belonging to a deceased individual. Initially, the survivor or nominee must initiate the claim process with the bank, as per the updated norms. This entails submitting necessary documentation, including the deceased locker-holder’s death certificate and the claimant’s valid identification, such as passport or Aadhaar card. The notable emphasis in the new agreement lies in the bank’s obligation to settle the claim and relinquish the locker contents within a strict time frame of 15 days from the date of claim submission — a specific provision absent in the old agreement.

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