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RBI new guidelines: Did Bank Safe Deposit Lockers just become safer?

On average, the rate of robberies has been increasing by 1.6% year on year across the country. While this might seem like a small figure, the scale, and impact of cases of theft is enough to scare the average citizen into looking for means to secure their hard-earned valuables. At this point, bank lockers were for long considered to be the safest places to store treasured jewelry, important documents, and other such valuables. Unfortunately, in a bid to secure our valuables, many fail to read the fine print. In 2017, the Reserve Bank of India (RBI) stated that banks were free of liability in case of theft or damage due to natural causes, of the contents placed in safe deposit lockers. And while one might argue that banks have multiple layers of security, cases of breaches do happen. The judgment came on an appeal filed by Kolkata resident Amitabha Dasgupta, who had filed a case in a consumer court in 1995 against his Bank, alleging that the bank had inadvertently broken open his locker for non-payment of dues as well as misplaced some of his belongings, even though there were no outstanding dues. Since a dispute arose regarding the contents of the locker, the case eventually escalated to higher courts and eventually the Supreme Court.

In light of this, the next big question customers found themselves asking was, ‘do we lose everything in such cases?’ Coming to the rescue of the common man, earlier this year, the Supreme Court of India directed the RBI to lay down regulations within six months mandating ways in which banks should operate with respect to locker facilities. These new rules stated that banks can no longer claim ignorance about contents to deny liability. The modified guidelines, which will come into force with effect from January 1, 2022replaced the instructions issued in the year 2017. At the same time, it has brought about much-needed accountability by banks, as well as a respite to the locker holders.

So what’s changed? And has it become safer to hold a safe deposit locker?

We take a look at what the new guidelines mean for customers.

Intimation on locker operation

Banks will now have to send an email as well as an SMS alert to the customer with an intimation of any activity related to the locker operation before the day ends.

Increased transparency in allotment

One of the biggest changes that the new rules have brought about is that banks are now mandated to maintain a branch-wise list of lockers that are unoccupied and also add a wait-list in the central banking system. As a result, the process of locker allotment will enjoy transparency and fairness in operations. Banks will now need to acknowledge the receipt of applications towards locker allotment, as well as provide a waiting list number in case lockers are not available immediately.

Layered security solutions

If the safe deposit lockers are being operated through an electronic system, the bank will ensure that the system is protected against hacks or any security breaches. Amidst rising cases of bank thefts and heists, banks have been instructed to set up fool-proof systems to ensure that the locker facilities have layered security to minimize the chances of a break-in.

Additionally, if a customer lodges a complaint with the bank that his/her locker has been operated without authority, or if any theft or security breach is observed, the bank is liable to maintain the CCTV recording till the police investigation is completed and the matter is settled. The customers’ personal data, including their biometric data, cannot and will not be shared with third parties without their approval. Additionally, banks should ensure they have systems in place that are capable of maintaining unalterable logs, and that electronically operated lockers meet the requirements of the Cyber Security Framework agreed by the RBI.

New clause

Every bank will have to incorporate a clause in the locker agreement, that the customer hiring the locker will not keep anything unlawful or any hazardous material in the safe deposit locker. If in any case the bank doubts the placement of any illegal or dangerous substance by any customer in the safe deposit locker, the bank can take appropriate action against such customer. Banks will have to mandatorily mark locker keys with an identification code unique to the bank/branch.

Once the new set of rules are set in stone, customers can rest easy knowing that they are protected at every turn possible. It will be the responsibility of banks to take all steps for the safety and security of the premises in which the safe deposit vaults are housed. Banks have the responsibility to ensure that incidents like fire, theft/ burglary/ robbery, dacoity, building collapse do not occur in their premises due to their own shortcomings, negligence and by any act of omission/commission. Banks won’t be able to claim that they bear no liability towards their customers for loss of contents of the locker, in instances where the loss of contents of the locker are due to incidents mentioned above or attributable to fraud committed by its employee(s). The banks’ liability shall be for an amount equivalent to one hundred times the prevailing annual rent of the safe deposit locker.

For banks to ensure maximum protection, they should proactively invest in a high level of integrated security solutions, which are specially designed for them. The new guidelines talk about access control systems, the need for CCTV footage and more.

While it is expected that banks may pass on some of the burden of the additional infrastructure costs and even the incremental insurance premiums etc. to their customers, it is indeed a step in the right direction. These guidelines, if followed in letter and spirit, shall drive enhanced safety, security, and peace of mind to the bank’s customers.

The article has been written by Pushkar Gokhale, Vice President – Marketing and Sales, Godrej Security Solutions