If you are a State Bank of India (SBI) customer, you would have received messages over the last few days urging you to sign revised locker agreements.
“Dear Customer, please visit your branch for the execution of a revised locker agreement. In case you have already signed the revised agreement earlier, you still need to execute a supplementary agreement,” reads the message sent by SBI.
Like SBI, Bank of Baroda has also been exhorting customers who maintain lockers at its branches to sign revised locker agreements by June 30, 2023. Soon, all banks are likely to follow suit.
In January 2023, the Reserve Bank of India (RBI) had extended the deadline for banks to complete the process of renewal of locker agreements in a phased manner by December 31, 2023. The first milestone of renewal of 50 percent of the agreements by June 30, 2023, is just a month away. The second milestone for the banks is a renewal of 75 percent of the agreements by September 30, 2023.
The instructions have their genesis in a February 2021 Supreme Court (SC) judgment. The SC had directed the RBI to finalise regulations for locker management within six months from the date of the order.
The RBI complied with the order in August 2021, issuing a circular that requires banks to have a board-approved agreement in place for lockers. “Banks may adopt the model locker agreement to be framed by the Indian Banks’ Association (IBA). This agreement shall be in conformity with these revised instructions and the directions of the Hon’ble Supreme Court in this regard,” the RBI notification said.
Agreements incorporating the new rules came into force on January 1, 2022, for new locker customers, but for existing customers, banks had to complete the process by January 1, 2023. Just before the January 1 deadline was set to expire, the RBI and the banks realised that a large number of customers were yet to sign the revised agreements. In fact, several banks hadn’t even alerted their customers on the need to sign the revised agreement by January 1.
Consequently, the RBI decided to extend the deadline for banks to complete the process for existing safe deposit locker customers in a phased manner by December 31, 2023.
Also read: Here's why you need to visit your bank lockers regularly
Agreement on stamp paper
According to RBI guidelines, the agreement needs to be on stamp paper, which the banks are to provide free of charge. The primary objective of the revised agreement is to protect the interest of locker holders.
“Banks are advised to facilitate the execution of fresh / supplementary stamped agreements with their customers by taking measures such as arranging for stamp papers, franking, electronic execution of the agreement, e-stamping, etc., and provide a copy of the executed agreement to the customer,” the RBI circular issued on January 24, 2023 had said.
“While some banks are providing the required documents, others have asked customers to procure the stamp papers,” says Reji Thomas from Hyderabad, who has a locker with a public sector bank.
However, the RBI has not specified the denomination of the stamp paper. Purvi Dalal, from Ahmedabad, has two lockers; one with a public sector bank and another with a private one.
The public sector bank is asking for the agreement on a Rs 20 stamp paper, whereas the private bank is asking for it on a Rs 100 stamp paper. Customers have also complained that their banks are demanding stamp papers in varying denominations of up to Rs 200. In fact, different branches of the same bank in the same city differ on the denomination of the stamp papers, the customers told Moneycontrol.
“There is a lack of clarity on the denomination of the stamp paper,” said a bank official who handles retail banking operations, requesting anonymity.
According to RBI guidelines, banks have to provide a copy of the agreement to customers. “A copy of the locker agreement signed by both parties shall be furnished to the locker-hirer to inform her about her rights and responsibilities. The original agreement shall be retained with the bank’s branch where the locker is situated,” stated the guidelines.
“It’s about standardising agreements rather than changing — something the RBI has been doing a lot,” says Adhil Shetty, CEO, BankBazaar.com, and adds that standardising makes it easy to check for any discrepancy in the terms and conditions between banks.
For instance, it is now mandatory that customers have a copy of the agreement, making it easy for them to refer to the terms and standard operating procedures (SOP) for lockers. It is also mandatory to display all terms and SOPs at branches and on the bank’s website.
If your bank has given you an agreement to sign on, read it carefully. If you disagree with the clauses your bank has put down, talk to your bank and ensure the terms are per the RBI guidelines.
Also read: Hiring a bank locker? Here's a checklist of what you should know
FDs for the locker
At the time of locker allotment, the RBI has permitted banks to obtain fixed deposits (FD) capable of covering three years’ rent and charges for breaking open the locker, if needed. This is to cover situations where the locker-holder neither operates the locker nor pays the rent. However, banks cannot break open the locker in case of customers with a good track record.
Also, if the bank collects locker rent in advance, but the locker-holder surrenders the locker mid-term, the bank will have to refund the proportionate amount of advance rent collected.
Discharge from liability
The bank shall not be liable for deterioration or damage to the contents of the locker, whether caused by rain, flood, earthquake, lightning, civil disturbance, riot, terrorist attack, or negligence of the customer.
Compensate in case of theft, fire
However, it is the responsibility of banks to take all steps for the safety and security of the premises in which the safe deposit vaults are contained. The bank will have to compensate the locker-holder in case of incidents like fire, theft, burglary, robbery, dacoity, building collapse, negligence by the bank, or fraudulent activity by its employees. The bank’s liability will be equivalent to 100 times the prevailing annual rent of the safe deposit locker.
Alert for locker access
Register your email id and mobile number with the bank. The banks will send an email and SMS alert intimating the date and time of locker operation. The banks will also provide the redressal mechanism for unauthorised locker access.