Do you have a Safety Deposit Locker with a bank in India? Are you thinking about availing one? Irrespective of whether you have or don’t have a locker, the topic of Safety Deposit Lockers provided by banks is bound to be of interest to everybody. With the rising crime rate in the country, Bank Safety Lockers are one of the few alternatives for the population of our country to store their valuables. Though there have been cases of bank lockers being broken into, once in a while, such cases are few and very rare. So, the general feeling among the public in our country is that Bank Lockers are extremely safe which is 99.9% true...
All this said, opening or availing a Safety Deposit Locker or simply a Bank Locker is not an easy task. The purpose of this article is understand what these lockers are, how to avail them and many more things about this facility. If you have any further questions about Bank Lockers at the end of this article, please feel free to leave a comment and I will try to answer them as best I can.
So, What is a Bank Locker?
A Bank Locker is a "Safe" or a "Vault" or a "Locker" that is rented out by banks in exchange for a fee. The Lockers are guarded heavily and made out of extremely strong metals which can’t be easily forged into. These lockers can be used to store physical valuables like jewellery, legal documents & agreements, cash etc. What is stored inside a locker by the customer, from a banks perspective is "None of my business".
The bank protects the locker on our behalf and we can keep whatever we want inside it.
How Does a Bank Locker Work?
Simple - Just like any locker. It has keys and once the requisite keys are inserted, the locker opens.
In case of Bank Lockers, they have two keys. One is maintained by the bank and the other by the customer. Only if both keys are used simultaneously, the locker will open. Usually the bank representative will help customers open the locker by providing the bank's key and then leave the customer alone inside the vault room to use their locker.
In return for the locker facility, the customer pays a yearly fee which varies depending on the size of the Locker held by them. Smaller lockers cost a few hundred rupees fee every year whereas larger lockers cost many thousands of rupees every year.
How do Banks Rent Out these Lockers?
Banks are supposed to rent out or should I say allot these lockers on a first-come-first-served basis. When a bank sets up a safety vault in one of its branches, it is supposed to take applications from customers who would be interested in renting out a locker and allot the lockers in the order in which the customers applied.
In case there are more takers than the no. of lockers available, the bank is supposed to maintain a Waiting List and allot the lockers to the person at the top of the waiting list when availability (due to surrender or closure by an existing customer) comes up.
Is this how banks rent out lockers in real life - Unfortunately NO...
So, How do Banks Rent Out Lockers in Real Life?
Banks these days are asking for hefty fixed deposits (depending on the size of the locker you wish to rent out) from customers in return for the Locker Facility. Some banks go a step further and give the customer an option to either open an FD or invest in one of the high-commission-paying Insurance/ULIP product sold by the bank branch in return for the Locker Facility.
Can Banks as for a Security Deposit while Availing a New Locker Facility?
Yes, Absolutely Yes but only to new customers. Existing customers cannot be forced to come up with security deposits after they actually opened their locker accounts.
But, the important kicker here is that - Banks can only ask for a security deposit to cover 3 years’ worth of Rent for the Locker and a fee to open the locker when a customer wants to open a locker account. The RBI Guidelines are very clear in this regard. According to RBI:
To ensure prompt payment of locker rent, banks may at the time of allotment, obtain a Fixed Deposit which would cover 3 years rent and the charges for breaking open the locker in case of an eventuality. However, banks should not insist on such Fixed Deposit from the existing locker-customers.
This is done to ensure that, in case the customer does not use the locker for a period of 3 years, the bank has enough funds to cover their charges for the "Locker Rental" for 3 years as well as to open the unused locker.
So, for example, if your lockers rental is Rs. 1000/- per year and the nominal charge to open a locker of the size that you wish to rent is Rs. 500/- the bank can ask for a security deposit of Rs. 3,500/- only.
Unfortunately, Banks actually ask for large FD's like 2 lakhs or 5 lakhs if you want a Bank Locker. So, this brings us to the next "BURNING" question...
Is it Mandatory to Open a Large Fixed Deposit while Availing the New Locker Facility?
No. Absolutely Not. The RBI Guidelines are clear in this aspect. Banks cannot force customers to come up with large Fixed Deposits in order to allot them a Locker.
Remember: This practice of asking for a large sum as FD or asking you to invest in some hi-fi ULIP product etc. is 100% illegal and banks are not supposed to engage in such unfair practices. The Sad state of affairs is that, Banks continue to blatantly disobey the RBI guidelines in this regard.
What are My Options if a Bank Officer Asks me for a Large FD in return for a Locker?
You can tell the bank officer that you know the RBI Guidelines for opening a locker and that they cannot demand such hefty deposits. This will probably result in a shock on the bank officer’s perspective and he will end up with either of the following responses...
Response No.1: No, no, I was not demanding an FD. The waiting list is quite high and a good FD may just prioritize your name, that’s all. The decision to open an FD is entirely yours and we will get back to you once a locker is available.
Response No. 2: Sorry, we currently do not have lockers available. We will add your name to the Waiting list and get back to you once they are available.
As you can see, your knowledge of banking guidelines is not going to get you a locker because, Lockers are one of the biggest source of FD's especially large value FD's for Banks. So, they will not give-in to your request that easily.
Option 2: This option is only applicable for Government Banks. Private Banks do not come under RTI so, check Option No. 3.
You can tell them you will file an RTI and find out if the bank actually does not have any locker vacancies.
This will result in an even bigger shock and the bank officer will probably give in to your request and try to bargain on the amount you need to deposit in an FD to open the locker. I would say that, if the number is quite reasonable like Rs. 10,000 or so, just don’t argue too much and get your locker.
If the bank officer is still adamant about the large sum FD, then the only option you have is to actually file an RTI complaint.
A Few months back when I was writing a series of articles about EPF, there was an article titled What Options Do I Have if the EPFO Grievance Redressal Does Not Work? which explained the steps on how to file an RTI Complaint against the regional EPF Office. The Steps to file an RTI complaint are the same in this case too.
When you file a RTI letter against any Government Bank, it has to be addressed to Central Public Information Officer (CPIO) or Central Assistant Public Information Officer (CAPIO). Now all the major branch heads of Nationalized Banks are also CPIO’s and you can directly write the RTI letter to the branch head, but address them as CPIO’s. So in the place of address, mention the branch name and the name of the bank with full address.
When you file RTI complaint, you can ask the following questions:
1. How many lockers are available in the branch?
2. What is the size of the different lockers available?
3. How many lockers are currently free and available to new customers?
4. What is the Rental amount per year for the different Locker types?
5. How many people have requested for locker facility and are currently on the waiting list?
6. Is there any requirement to make a Fixed Deposit for getting the Locker?
7. What is the amount of fixed deposit to be opened and what are the rules for it?
8. In how many days will a bank locker is allotted depending on your current position in the Waiting List?
If you are requesting a locker in a private bank, your options are pretty limited. Check out the banks website and try to find out the contact details of the Grievance Redressal department or the Compliance department of the bank. Once you find it, contact them.
Once you contact such people in responsible positions via email/written communication, they are obliged to act in a fair and ethical manner. They cannot arm-twist us like the managers or officers in the bank branches. Since even private banks come under the RBI guidelines, they are supposed to act on your grievance; there is a very good chance that your grievance will be addressed by the appropriate person even though it is a private bank.
If you receive no response from these people, you can contact the Banking Ombudsman to get your grievance addressed and this will definitely help you get a solution to your situation.
Let us say, you managed to get a locker somehow, there are many more things you need to know.
Can the Bank Open my Locker without my Permission?
If you fail to pay the rent on time or if the bank or police suspect illegal activities on your part they can open your locker even without your written consent.
At the beginning of this article I said that bank lockers are 99.9% safe. So, what happens if someone manages to break into the Lockers?
This can be big news to most of you, and more importantly a shocker.
The truth is that - Banks are not responsible for the contents inside your bank lockers for any unforeseen events which are beyond the control of banks, provided they have done proper due diligence from their side to protect it.
So, this means that, if the Bank has constructed the locker in the best possible manner and is guarded by armed guards and still someone managed to break into the locker and steal some items, there is actually not much the bank can do for you. Nor are they responsible in case of natural calamities like an Earthquake or a Fire Accident or Cyclone Flood etc.
The Important point here is that the banks have to ensure that they take all possible steps to ensure the safety of the items held inside the lockers by customers. If there is water leakage and it resulted in stuff being soaked in water in the bottom locker shelf, the bank will be held liable to the damage. If the lockers were not guarded properly and as a result a robbery occurred, again, the bank will be liable because they failed to protect the locker adequately.
So, In Case, the bank was found Irresponsible which resulted in the Robbery - What will I get?
As there is no written record or verification of what you stored inside your locker, you can’t actually quantify the value of the items that were kept inside. However, Banks insure the lockers to cover for such rare instances. In such cases, you as a customer must provide receipt to show that you in fact owned such an item and that it was lost due to this Robbery. In such case you will get some sort of compensation.
As, there is nothing written or noted down about the contents of your locker, there is a good chance that you will end up on the losing side here. If you are lucky, you may get around 20% or 30% of the value of the items you held inside.
Remember - You cannot quantify actual cash that was kept inside the locker because you are not supposed to keep cash in these lockers. That is why Bank accounts are for!!!
Some General Safety Precautions While Using Lockers:
1. Keep your Locker Key in a Safe Place and make sure that your spouse or at least one more family member knows how to access the locker
2. Open your locker only after the Bank representative leaves the Locker Vault Room
3. Make sure to lock the Locker properly before leaving the Vault Room
4. Keep your eyes and ears open. Make sure that you are not watched or followed when you are operating your Locker
5. Visit your locker frequently - at least once every 2 or 3 months and make sure that all your items are safe
6. Always keep a list of the items that you have kept in the Locker. In case of the improbable event of your locker being compromised, you can at least know what was lost and try to establish a value for it
A General Suggestion:
Most Banks accept Jointly Held Locker Accounts where 2 or 3 people who are blood relatives - mother/father/spouse/son/daughter. It is always a good idea to open up lockers as jointly held because in case one of the locker holders is out of town or for some reason unable to access the locker, the other person can still access the locker.
A Real life example could be, let us say, Mr. X opens up a locker and places all his wife's gold jewellery inside it for safe-keeping. His wife knows that her husband rents a locker at XYZ Bank but she is not a co-holder of the locker. One fine day Mr. X met with a bike accident and is hospitalized. The doctors ask for a big sum of money and Mrs. X knows that she has more than enough jewellery to sell and pay for her husbands treatment. But, she is not a joint-holder of the locker. So, legally the bank cannot and will not allow her access to her jewels which can save her husbands life.
This story above may sound cinematic, but the truth is, we never know what is going to happen next to either us or our family relatives. "Hope for the best but, Plan for the Worst" is a saying that holds good in most financial situations. So, make sure that you include your wife/husband/mom/dad/son/daughter as a joint holder when you open a locker or edit the current settings and include them as a joint holder.
I have tried to cover as much details as possible regarding Bank Lockers in the article above. If you have any questions reg. these lockers that aren’t covered above, do feel free to leave a comment...