Banking on safe deposit lockers

Anand Aras

Banks offer a wide array of facilities, services and products to customers. One such facility is the provision of safe deposit lockers for storing personal valuables, documents etc.

Most banks in India rent out lockers for personal use, though for an annual fee. However, there is no standardised procedure. 

Banks charge different rents depending on their policies. Private sector banks usually charge higher rents than their public sector counterparts.

Also, rates in rural and semi-urban areas could be lower than in metros and urban centres.

The best time to buy

The best time to buy a bank locker is at the time of opening an account. A customer can choose the type of bank locker — small, medium or large — depending on his or her requirement and affordability. But be sure to ask for the rates. Some banks are known to charge high rental fee.

Banks are obliged to offer safe deposit facilities even to non-account holders though they are often seen to give preference to their existing customers.

The BCSBI Code of Bank's Commitment to Customers (Para 8.9) mandates that the procedure for allotment of safe deposit lockers should be completely transparent. 

It also assures customers that lockers would be allotted without being linked to fixed deposits.

Having said that, banks are permitted to obtain FDs that cover three years of rent and breaking charges in case of an unforeseen situation.

Long queue for lockers

In spite of these directives, banks often ask customers to place large amounts in fixed deposits or subscribe to insurance policies they don't really need. The reason: Long waiting list for lockers. This is fine so long as the list is maintained as mentioned in the Code of Bank's Commitment to Customers. Insist on a waiting list number as acknowledgement. In case you are compelled to place a large deposit or subscribe to other products, you can complain to the higher bank authorities or to the Banking Ombudsman.

If a locker has not been operated for more than three years, the bank can ask the customer to either operate or surrender the locker to mitigate risks. A part of customer due diligence, this exercise should be carried out even if the locker holder has been paying rent regularly.

Further, the bank can ask a customer to state in writing why the locker was not operated. In case the customer fails to respond or still does not operate the locker, the bank can open the locker after giving due notice. To prevent this situation, banks should incorporate in the agreement a clause regarding the cancellation of allotment and breaking the locker open. However, banks should follow due procedure for breaking open a locker and taking stock of inventory irrespective of the reasons for taking this extreme step.

In the interest of customers, banks are duty-bound to offer full guidance on safe deposit lockers, offering clarity on issues such as nomination facility and survivorship clause. That does not mean banks cannot rent out lockers to sole holders. 

According to the Banking Companies (Nomination) Rules, 1985, all banks should strictly comply and devise a proper system of acknowledging the receipt of the completed form of nomination, cancellation and/or change of the nomination. The acknowledgement should be given to all customers whether they ask for it or not.

While it is always beneficial to store your valuables in a safe deposit locker, take all precautions before taking it on rent. After all, you don't want to compromise the safety of your valued items.

(The writer is CEO, Banking Codes and Standards Board of India. The views expressed in this article are his own)