In India, millions of customers deposit their valuable assets, such as gold, silver, and cash, in bank lockers for safekeeping. These vaults, constructed with highly secure metals, are meant to protect valuable assets from any harm. However, theft, fire, floods, or natural disasters can lead to damage. Understanding the repercussions of such events and the guidelines followed by Indian banks becomes crucial.
If your valuables in the bank locker are stolen or damaged due to flood, earthquake, riot, terrorist attack, customer negligence, etc., the first expectation would be for the bank to take responsibility and compensate for the losses. However, it shocks many. According to the Reserve Bank of India (RBI), the banking entity is not responsible for the valuables in their lockers.
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But in the event of incidents like fire, theft, robbery, building collapse, or fraudulent activity done by its employees, the bank’s liability will be equivalent to only 100 times the prevailing annual rent of the safe deposit locker. Here again, the compensation you get is too low.
For instance, if the annual locker charges are Rs 1000, the bank will compensate Rs 1 lakh only, irrespective of the cost of valuable assets you have kept in the locker.
“While the bank is mandated to take due precautions, it has no liability in case of damage or loss of locker contents due to natural calamities like earthquakes, floods, etc. In other cases, like fire, theft, dacoity, building collapse, etc., the bank does bear a liability due to the bank’s negligence. However, this is limited to an amount equivalent to one hundred times the current annual rent of the safe deposit locker,” said Adhil Shetty, CEO of BankBazaar.com.
The reason is that the banks neither know what is inside the locker nor the worth of its contents. Customers are not obliged to disclose the contents of their lockers; assigning a value to them for compensation thus becomes almost impossible.
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Furthermore, the bank’s agreement stipulates that the customer who rents the locker ‘leases’ the space provided for a specified period within which he can store any valuables of their choice. Hence, the onus of the locker contents and their safety lies solely on the lessee, not the lessor.
The moot question is, will you get the compensation if you keep cash at the bank? In a move aimed at regulating the usage of safe deposit lockers in banks, the RBI has introduced a new agreement allowing customers to utilise lockers only for legitimate purposes, such as storing documents and jewellery. Explicitly stated, customers are prohibited from using lockers for maintaining any form of cash or currency.
While keeping cash in a locker will not fetch interest, you might not even get adequate compensation if the notes get damaged. If the value of the money is more than the bank’s liability, then it would be a double misfortune for you.
Shetty says, “Technically, you can keep cash in bank lockers. However, any unexplained cash found with a taxpayer may raise questions from the tax department and require the taxpayer to explain the source of such funds and documentary proof. It is much safer to deposit the money with the same bank where you have your locker. It will allow you to keep the money safely and earn interest.”
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“It is possible to keep the account private from others for security reasons in case you are worried about security. But a bank account is any day better than keeping cash in the locker. The chances of loss from natural disasters and accidents are much higher in the latter case,” added Shetty.
Besides, banks have also been empowered to enforce stringent restrictions on the storage of items. The agreement specifically prohibits the storage of any hazardous substance, such as arms, weapons, drugs, contraband, or perishable or radioactive materials. This ensures no potential threats or nuisances to the bank or its customers. Additionally, the agreement stipulates that the license to employ a locker is non-transferrable; it’s solely for personal use by the licensee.
For transparency, the new stipulations also mandate that every new or existing customer must sign a locker agreement on stamp paper wherein the banks will bear the cost of the revised locker agreement.
The Apex bank insists that banks aim to have 75 per cent of their existing customers signed up to the new agreement by September 30. The norms apply both to existing customers and new users post-deadline.
