With increased KYC requirements and sizeable increase in bank locker charges, 56% of locker holders have either shut it or are planning to do so/shift to a smaller locker; some say banks violating terms to collect locker charges

December 15, 2023, New Delhi: Revised locker agreements will have to be signed and submitted by account holders to their bank branch if they have signed it on or before December 31, 2022, under the new Reserve Bank of India (RBI) rules that will come into effect at the end of this calendar year. The new rules for the bank safe deposit lockers, with regards banks’ responsibility and the locker users, have been framed with several modifications by the RBI in accordance with the Supreme Court order in 2021 asking it to redefine the responsibilities and liabilities of banks and their locker users. Initially the new rules, wherein the bank responsibility for the content and safekeeping has been redefined, were slated to come into force by January 1, 2022, but was put off for a year and now with further modification will come into force on December 31 this year.

Earlier as a custodian of the locker, the banks had a larger liability in the event of a theft or damage to the articles stored in the locker. Now under a new locker contract, to be signed on stamp paper, between the bank and the locker user, both existing and new, the bank will be acting as a lessor and the customer will be the lessee. The contract document will spell out the rights and duties of the user and bank, locker rent, escalation clause, etc. The new rules define that the customers can only store jewellery and documents in the locker but no cash or any hazardous material including weapons. The responsibility in case of any violation will rest with the user and not the bank. Earlier this year, a woman in Udaipur reportedly lost 2.15 lakh rupee when termites attacked the currency notes in the locker. Unlike such cases, the bank will still bear the responsibility for the safekeeping of the locker contents provided they are permissible items. The liability of a bank towards a loss faced by the user due to the bank’s negligence may be up to 100 times the prevailing annual locker rent, excluding any damage or loss due to natural calamities.

With many banks regularly calling locker holders to visit the branch with necessary KYC documents to sign paper work and with many of them increasing locker charges in recent years, LocalCircles has been receiving posts and comments from locker holders indicating their grievances. In some cases, the locker holder is an NRI and simply unable to sign the agreement by the deadline and have demanded that an electronic way be there for signing the new locker agreement. Given high citizen interest in the subject, LocalCircles through a new survey has sought to know from citizens the extent of the problems they are facing on the bank locker/agreement front. The survey received over 23,000 responses from citizens located in 218 districts of India. 66% respondents were men while 34% respondents were women. 46% respondents were from tier 1, 33% from tier 2 and 21% respondents were from tier 3 & 4 districts.

56% of bank locker holders have either already shut it or are planning to shut/ downgrade their locker size soon

The survey first asked citizens “With most banks having increased locker charges by 100-300% in the last 3 years and increasing KYC requirements significantly, how are you and your family coping with these changes?” Surprisingly out of 11,870 responses to this query, over one-third of respondents indicated that they have surrendered their bank locker. The data shows that while 36% of respondents have “shut the locker” in the last three years; 16% have been “paying the higher rate and complying with the KYC requirements but will soon shift to smaller lockers”; 4% of those surveyed indicated that they have “been paying the higher rate and complying with the KYC requirement but will soon shut the locker”; 36% of respondents shared that they “have been paying the new rate and complying with the KYC requirements and will continue to do so”; and another 8% of respondent are undecided on the issue. In sum, troubled by the increased KYC requirements and sizable increase in bank locker charges; 56% of locker holders have either already shut it or are planning to shut or shift to a smaller size more affordable locker soon.

8% surveyed said the bank directly debited locker rent from the secondary person authorised to operate the locker and having an account at the bank

Following up on some consumers’ complaint that their bank account has been debited for locker rent though it was not in their name, the survey asked “How has the bank charged the locker rent from you in the last 3 years?” The query received 11,493 responses with the majority or 88% who stated that “they directly debited it from the primary account owner’s bank account”; 4% stated that they “gave a cheque”; however 8% of respondents indicated that the bank “directly debited it from the secondary person authorised to operate the locker and having an account at the bank”.

In summary, the citizens have or will have to sign a new legal lease contract with their bank for the safety lockers by December 31. While safety is being assured with responsibilities clearly spelt out, a steep hike in locker rental has seen 56% of locker holders surveyed either give it up in the last 3 years or are planning to shut/ shift to a smaller size soon. It is important that while charging for services, the banks have to be more responsible to ensure their locker rents don’t become unaffordable or their purpose is defeated. What is upsetting some is that when the locker rent is not being paid by the primary locker owner, the banks are directly debiting it from the secondary person authorized to operate the locker and having an account at the bank. This is being done without the knowledge or consent of the account holder, according to reports. In many cases the secondary persons may not even be using the locker. In such cases it is unfair to penalize him/her without consent or informing. The RBI should look into this issue, which has been highlighted by 8% of those surveyed.