In this blog post, Shakil Hayat Siddiqui, pursuing M.A. in business law from NUJS, Kolkata, talks about the rules & regulations governing bank lockers in India.

I recently went to my nearest bank for opening a locker. I have a salaried savings bank account in the bank. Manager of the bank told me to make an investment of more than fifty thousand in FD, mutual fund or insurance policy. I came back without opening a bank locker. Same experience also happened with several of my friends. And more often than not everyone have to create a FD or make an investment in order to rent a bank locker.

So, what does banks say about opening a locker? Are there any rules and guidelines given by RBI regarding safe bank lockers? What is the relationship between the bank and the person who hires the locker? What is the liability of the bank in case contents of the locker gets stolen? What happens if the locker hirer dies?

How Does One Get a Locker in a Bank

A bank locker is used for depositing valuables like gold, jewelry and important documents . It can be hired by individuals, firms, trusts, companies etc. Locker comes in different sizes like  small, medium, large and extra-large.

Rent of each locker differs on the basis of size. For example, in SBI it ranges from  Rs.1500 per year (small locker rural branch) to Rs 8000 annually (extra-large locker in urban branch). For accessing the locker there are two keys – one key is with the bank while the other key is with the customer. A locker can’t be accessed without using both keys simultaneously.

RBI rules and Regulations (Based on RBI Master Circular)

• A bank can ask a locker hirer for a FD equivalent to three years rent and amount for forced opening of locker due to unavoidable circumstances (FD’s interest pays the rent). A bank can’t ask for a FD from already existing lock hirers. Also, in no way a bank will link locker hiring to FD or investment of an amount which is beyond reasonable amount.

• Banks should try to provide locker facility keeping in mind commercial viability. A bank should maintain a waiting list of customers who want to hire a locker. All applications to be given a waitlist number.

• A copy of agreement between bank and hirer to be given to the latter.

• Banks to carry out KYC checking after ascertaining about risk associated with the hirer. This should be done for new as well as old customers.

• Not operating the locker (medium risk – more than three years, higher risk – more than one year). In this case bank have to notify the locker hirer to either operate the locker or surrender it even if the rent was paid already. Bank should ask for a written reply to know the reasons for not operating the locker. In case there is no reply and also locker is not operated, bank can open the locker forcibly after giving a formal notice to the hirer. A detailed procedure to be adopted by the bank if locker is to be opened forcibly.

• A procedure for opening the locker forcibly should be drawn by the bank.

• For identifying owner of keys, keys could be embossed with the bank/branch identification code.

• All possible safeguards to be taken by bank for protection of bank locker.

Nomination

Banks are supposed to make guidelines based on following laws:

1. Section 45 ZC to 45 ZF of banking regulation act 1949
2. Banking compliance rules 1985
3. Indian contract act and succession act

Banking Nomination rules 1985

1. Only single individual can be nominated.
2. Nomination can be cancelled or changed during the period in which locker is under hire.
3. In case of nomination of minor, another person to be authorized on behalf of a minor.
4. Different forms are there for different types of nomination. (form SL1,SL1A,SL2,SL3 & SL3A)

Section 45ZE of banking regulation act 1949

1. A person can be nominated by locker hirer who can be given access to the locker and remove locker contents in the event of death of locker hirer.
2. When the locker is hired jointly and can be operated jointly only if one of the locker hirer dies than the nominee and the surviving joint hirer can access the locker and may remove its contents also.
3. Before removing contents, an inventory of the locker contents should be prepared and signed by nominee or jointly by nominee and the surviving locker hirer.
4. There is no liability of the bank after removal of locker contents by the nominee.

Section 45 ZF of banking regulation act

No person other than hirer or hirers can give a notice  to a bank for claiming locker contents except that from a court of competent jurisdiction. In that case bank should take note of such decree.

Access to the locker contents (with survivor/nominee clause)

• Sole hirer– Nominee can be given access to the locker  by the bank. He can also remove the locker contents.
• Joint hirers– If the locker is to be operated jointly and one of the hirers dies, then bank can give access to locker contents jointly to the nominee and the surviving hirer. They can also remove the content of the locker.
• Documents required by the bank-

• An identification certificate of the nominee  and death certificate of the locker hirer to be obtained by the bank.
• Bank should strive to find out whether there is any court order against opening of bank locker of the hirer.

Access to the locker (without survivor/nominee clause)

Bank should make  detailed  procedure as per RBI  in order to avoid inconvenience to the legal heir of locker hirer.

1. Sole hirer dies– Bank can give access to the legal hirer after obtaining death certificate and proof of legal representation.
2. Joint locker hirers (locker to be operated jointly only)- In this case bank can give access to the survivor jointly with legal heir of the dead hirer. Bank should obtain death certificate and proof of legal representation.

List of contents in inventory

1. Before allowing content removal of items in the locker, bank should make a list of the locker contents in the prescribed form.
2. If the nominee wishes to continue with the locker, a new agreement can be agreed with the bank after doing all formalities.

Position of banks

Banks have a deposit policy which includes policy of locker hiring. All banks are supposed to follow the guidelines issued by RBI. Policy regarding safe bank lockers by banks can be obtained online. Most of the banks suggest to go to the local branch of bank in order to get the details regarding locker opening. If one wants to know whether a particular branch has locker facility, then it can be obtained online.

Below are the guidelines of some of the banks-

STATE Bank of India (based on sbi.co.in)

Terms and conditions are given by bank regarding locker-

• Rent is nominal depending upon the size of locker and location of the branch. The rent is to be paid annually in advance for the financial year. (guideline by RBI)
• Copy of the agreement between the hirer and bank can be obtained by the locker hirer at the time of locker allotment. (guideline by RBI)
• Bank suggests to avail nomination facility so that no problem comes to the nominee in case of unfortunate demise of the locker hirer. (as suggested by RBI)
• Bank follows the guidelines given by RBI regarding access to lockers and removal of locker contents in case of demise of locker hirer. (already discussed earliar)
• Bank does not insist on succession certificate from locker the nominee. (as per RBI guidelines bank should not unnecessarily ask for more documents)
• Bank prepares an inventory of locker items before the nominee can remove the contents of the locker.
• If the nominee or survivor wishes to continue with the bank locker he can enter into a fresh agreement.
• Bank arrange to emboss on all locker keys an identification code of the branch and the bank.
• Bank can cancel the locker allotment and open the locker if locker is not operated for more than a year. (as per RBI guidelines)
• KYC norms are applied to all bank locker hirers.
• Minors are not allowed to hire a locker either individually or jointly.

HDFC Bank (based on hdfcbank.com)

• Rent is payable in advance and charged every year.
• It is recommended to have savings or current account to be linked with to the locker for rent recovery. As per RBI guidelines, there is no mention of linking savings or current account with the locker for rent recovery.
• Locker hirer can add, cancel or modify a nominee by filling relevant forms (this is as per banking nomination rules 1985)
• For sole hire locker, one nomination can be made.
• Two nominations can be done in case of joint locker-hirers.

Axis Bank (based on axisbank.com)

Bank site says that locker facility is available to all account holders. It means that in order to open a bank locker, a locker hirer should first open a bank account. RBI guidelines doesn’t say anything about opening an account for availing bank locker facility.

Rental of the locker is to paid annually and again depends on type of branch and size of locker (from a minimum of Rs 1500 to a maximum of 12,000).

Bank of Baroda (based on  bankofbaroda.com)

In this bank also, it is required to be an account holder in order to get a locker. Minors can’t get a locker. A locker  hirer has to operate the locker at least once every six months. If the locker is not operated for more than one year, bank can forcibly open the locker after giving proper notice.

Bank  clearly states the documents required for accessing locker in case of hirer’s untimely death-

1. With survivor/nominee clause– Copy of death certificate, claim form and discharged safe custody receipt.
2. Without survivor/nominee clause– In addition to above documents, a succession certificate or will is required.

A waitlist of locker hirers is maintained for locker allotment as per RBI guidelines.

Cases Regarding Bank Lockers

A customer can complain to the consumer forum under the consumer protection act 1986 if he feels there is deficiency of service by the bank.

As per consumer protection act, banking facilities comes under the preview of the act. Banking facilities come under services. As per the act service means service of any description (includes the provision of facilities in connection with banking) but does not include rendering of any service free of charge or under a contract of personal service (quoted from COMSUMER ACT 1986). A consumer can go to court if there is deficiency in any respect

Banks have tried to make the agreement  between the hires and the bank as between lessor and lessee. Banks lease lockers to the the customer and give the customer right to use this facility by giving rent. Banks contend that they do not know the contents of the locker so they are not liable for any loss suffered by the customer.

But if you go through all the bank sites, all banks claim that customer valuables will be safe in the lockers. For that they will charge a nominal fee annually.

If the locker hirer can prove that there is negligence of the bank, then the bank is liable for deficiency of service as per various consumer court judgments .

Suggested Reading: How to File a Complaint Against a Bank

Mahender Singh vs Punjab & Sindh Bank CPJ 231(NC)

Complainant filed a case against the bank when he found out that the contents of the locker was taken out by the previous allotee. He found this out when he was unable to open his locker with the key provided and locksmith ascertained that he had already broken the lock  earlier. Bank officials also confirmed this.

Bank in its reply told that it was a case of mistaken identity. Customer went to national commission against bank for deficiency in service for allowing previous allotee who had surrendered  the locker to operate the same.

Judgment was in complainants favour as bank had completely failed to follow its own guidelines regarding locker operation. Also banks are supposed to have a policy on forcibly opening of locker. The bank failed to give any notice to the customer before opening the locker.

Canara Bank vs Agnes D’mello

Complainant went to the bank locker with her sister–in-law  on 12.05.1987 and deposited jewelry in the locker and locked the locker on 13.08.1987, manager of the bank informed her sister-in-law that locker was found open and jewelry was stolen. The complainant filed a case in state commission which ruled in her favour and ordered the bank to compensate her. Bank filed an appeal before the national commission.

The commission held that the bank which provides a locker should ensure the safety of locker. Even if the complainant failed to ensure that the locker is closed, the bank is supposed to ensure at the end of the day that all the lockers are in closed condition as per its own laid out procedure. The lock provider contended that locker key can’t be taken out without locking the locker. So ,commission contended that the bank has to pay liability to the complainant.

Mihir Kumar Mukherjee vs Branch manager United Bank of India

The complainant contended that rent of the locker was hiked without his knowledge and same was deducted from his account without informing him. The complainant had agreed to pay the rent annually and also wrote a letter to the bank for deducting rent from his account. Complainant asked for refund of excess money deducted from his account.

National commission contended that there is no agreement between the bank and the locker hirer that hirer can continue the facility indefinitely without hike in rent. The complainant can continue locker facility or withdraw from the facility if he desires. So, there is no deficiency in service by the bank if it increases rent charges.

PUNJAB National bank vs  K.B.Shetty 1991

Complainant lost all her jewelry from her locker which was jointly held. State commission directed the bank to pay the complainant on account of loss of jewelry  with interest also payable.

Bank appealed the verdict to the national commission.

National commission contended that the bank was negligent in ensuring security of the locker. Bank failed to follow its laid down procedure. Also it failed to ensure that all the lockers are closed at the end of the day. The agreement between the two has to be determined by the contents of the agreement. Bank can’t relieve itself by describing the argument as between landlord and tenant.

Ratikanta Panda vs Satyanand Sahoo

There were two rival claimants for the safe locker and its contents. Bank  broke open the locker without informing the locker hirer as per its own records and took possession of the locker contents. It refused to give locker contents to the hirer as per the bank records on the ground that there was rival claimant. But there was  no record to ascertain the bank claims. It also failed to follow its procedure of informing the locker hirer to be given notice before opening the locker and accessing the contents. The bank was liable for deficiency of service.

Uco bank vs shiv kumar 2003

Bank locker of the complainant was found opened. This was informed to the complainant after 16 months of locker access by the complainant. State commission found the bank would be liable to compensate the loss on account of deficiency of service.

Dalmia vs Vijay bank

Locker rent was increased per annum without improvement in banking service. The complainant contended that it was deficiency of services. Commission contended that bank can charge up to the amount as per nationalized banks.

Ugam singh vs SBI

Locker was found open and ornaments were missing. The bank failed to order a departmental enquiry. It also failed to produce the details of persons who have accessed the locker. So, the commission contended that there is deficiency of service on part of the bank.

Conclusion

Although there are guidelines given by banks on locker operation, banks still try to circumvent the rules especially in forcing hirers to make investments beyond what is required as per RBI guidelines. Also the practice of  locker facility only to bank account holders is against RBI policy. As banks generally have a minimum balance limit in all accounts.

Banks also try to  avoid paying compensation in case there is security failure on their part.

It would be great if the RBI forces all the banks to compulsorily adopt nomination facility as a pre the condition for availing locker facility.

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