Bank locker customers must renew their agreements with their respective financial institutions by December this year as per the RBI mandate.
Reserve Bank of India (RBI) has advised all commercial banks to renew their locker agreements with customers by September 30, 2023, to improve transparency and strengthen banks' internal control. In a circular on January 23, 2023, RBI instructed the banks to inform customers by April 30, 2023, to renew their locker agreements and to ensure that at least 50 per cent of the customer agreements are revised by June 30 and 75 per cent by September 30, 2023.
As a result, many banks have started sending emails to their customers to comply with RBI’s orders. If you have received such an email, there is no need to worry, as RBI has laid down the steps to complete the process easily. The order is aimed at protecting customers’ interests.
The Delay
RBI first issued the order in August 2021, followed by a revised one on January 1, 2022.
Banks were required to renew their agreements with customers by January 1, 2023. However, since they couldn’t meet this deadline due to customer issues and their delay in informing their clients, RBI extended the period until December 31, 2023.
Revised Agreement
In compliance with RBI’s instructions, banks will now be liable if bank locker customers suffer a loss due to fire, theft, robbery, burglary, building collapse, fraud committed by bank employees, etc., for up to a hundred times the annual rent of the safe deposit box.
Furthermore, banks will have no liability for damage or loss of content due to natural calamities like earthquakes, floods, lightning, and thunderstorm, or any act of customer negligence.
In case the rent has not been paid for three years in a row, the bank, at its discretion, may break open the locker after informing the customer and allowing them to withdraw the locker articles.
If the customer surrenders the locker and the rent is paid in advance, the bank is required to refund the proportionate amount. Also, if the rent is regularly paid, but the locker is inoperative for seven years, and the customer cannot be located, in that case, the bank can transfer the locker contents to the nominee or the legal heir after the due procedure.
For example, Axis Bank has amended its locker agreement to include the following benefits:
· Compensation of up to 100 times the locker rent for loss of content due to the bank’s negligence.
· Pro-rata rent reversal in case of surrender before the annual rent cycle.
· Increased duration of rent non-payment, from 1 year to 3 years, and non-operation, from 3 years to 7 years, before break open.
The banks are also required to send alerts to the customer about locker access every day.
What Locker Owners Should Do?
If you have a locker, you must renew the stamped agreement with the bank. As per the RBI circular, banks may take “measures such as arranging stamp papers, franking, electronic execution of an agreement, e-stamping, etc. and provide a copy of the executed agreement to the customer”. The bank will also bear the stamp paper cost.
Locker owners who renewed their agreements before the revised model came from the Indian Banks’ Association (IBA); in that case, you must again undertake the process as per the latest changes.
Therefore, if you have received emails from the bank, it is simply a compliance requirement in your interest. You should immediately contact the bank or visit any bank branch to complete the formalities, which will safeguard your locker contents better.