scorecardresearchWhat are bank locker agreements that came into effect on January 1?

What are bank locker agreements that came into effect on January 1?

Updated: 02 Jan 2023, 03:18 PM IST
TL;DR.
The Reserve Bank of India (RBI) mandates commercial banks to renew their locker agreements with customers with effect from Jan 1, 2023
Locker holders of banks are supposed to sign a fresh contract that kicks off on January 1, 2023

Locker holders of banks are supposed to sign a fresh contract that kicks off on January 1, 2023

If you have rented a bank locker, it is vital to renew your contract as soon as possible. In fact, it was supposed to be done at the dawn of the New Year i.e., on or before January 1, 2023 by visiting the bank branch.

Signing the new contract is imperative to adhere to the Reserve Bank of India’s (RBI) guidelines released on August 18, 2021 that require banks to implement model locker agreement. The new rules were announced in August last year but their implementation was due for some time now.

There is no denying the fact that the new agreements came into force on January 1, but since most customers have yet not done in the wake of holiday season, it is meant to be done as soon as possible to be able to keep the locker operational.

Protecting customers’ interest

It is vital to point out here that the RBI announced the new guidelines via a notification on August 18, 2021. “Banks shall ensure that any unfair terms or conditions are not incorporated in their locker agreements. Further, the terms of the contract shall not be more onerous than required in ordinary course of business to safeguard the interests of the bank,” RBI had said.

The new rules are meant to protect the interest of customers, thus increasing banks’ obligation for safety and security of lockers.

Some relevant provisions of new agreement will keep customers’ interest intact. For instance, the bank will now be made to compensate a customer up to 100 times of locker rent in case there is loss of valuables resulting from the former’s negligence.

"Dear Customer, As advised by RBI, please visit your branch and execute revised Locker Agreement by 1st January 2023.Please ignore if already done- Team SBI. --- SBI sent this message to its customers"

Another provision that works to the advantage of customers is this: pro-rata rent will be given back to the customer in case he/she surrenders the locker.

Also, according to the new agreement, bank will be entitled to break open the locker in case of non-payment of rent for three years and non-operation for seven years. Earlier, these time limits were one and three years, respectively.

Term deposits for bank lockers

The new rules that came into force on Sunday also permit banks to insist on opening a term deposit in the name of customers to cover three years of rent plus charges for breaking open the locker. However, the rule relating to term deposits is not meant to be imposed on existing customers and those who have been operating their accounts satisfactorily.

Even from the new customers, banks can’t insist on a fixed deposit of a size beyond the permissible limit in order to remove any probability of arbitrariness.

As far as electronically-operated locker systems are concerned, banks must ensure that they adhere to the RBI-mandated cyber security framework.

Article
Banks are meant to bear some responsibility in case of damage of lockers.
First Published: 02 Jan 2023, 03:18 PM IST