Justice for all: Why customers can't bank on lockers

If you want to safeguard your valuables like property documents, jewellery or certificates, a bank locker is a common preference. Exploiting this need, many banks insist on a deposit of Rs 20,000 to Rs 25,000 depending on the size of the locker. Is this legal? 

The Committee on Procedures and Performance Audit of Public Services had observed that linking the locker facility with placement of fixed or any other deposit  is a “restrictive practice” and should be “prohibited”. But the Reserve Bank of India seems to have interpreted the words “beyond what is specifically permitted” in the guidelines, to allow banks “to obtain a Fixed Deposit which would cover 3 years rent and the charges for breaking open the locker in case of an eventuality” from new hirers. 

The deposit amount is calculated at the annual rate of interest it fetches multiplied by three years of locker rent. Such practices may fall under ‘anti competitive agreements’ covered by Section 3 of the Competition Act as they have the trappings of a ‘tie-in arrangement’ described in Sub Section (4) (a) of the Statute.

When annual locker rent is collected in advance, what is the need for this deposit which is usually just a couple of thousand rupees for a medium size locker? Wouldn’t most customers who opt for lockers maintain a minimum balance in their accounts? Can’t banks debit their accounts for locker dues? When customers keep their life savings and valuables inside, what is the percentage of hirers who would default on payment of rent and leave their lockers inoperative to warrant banks breaking them open? What explains the banks’ presumption of the “eventuality” of non-payment of rent and non-operation of lockers? 

Are such ‘eventualities’ more common than bad debts and non-performing assets? 

If there is a poll on organisations that epitomise double standards, banks may be front runners. On the one hand, they take the plea that as they make no inventory of the contents of lockers, they are not responsible for damage or loss suffered by the hirers. But when a locker with no nominee registered needs to be opened by legal heirs, they insist on an Indemnity Bond with a Surety, despite the claimants producing Death Certificates, Legal Heirship Certificates with proof of identity and address and the bank’s legal protection under Sections 45 ZC to 45 ZF of the Banking Regulation Act.

After Courts and Consumer forums had ruled that in the case of lockers, the relationship between banks and customers are not the equivalent of a landlord and tenant but that of a bailor and bailee, the RBI had advised banks to exercise due diligence. 

The National Consumer Disputes Redressal Commission in Canara Bank Vs Agnes D’Mello had referred to Section 73 of the Contract Act while ruling that the bank could not absolve itself of the responsibility to pay damages for the loss of locker contents.  Abundant caution need not take on the aggravated form of paranoia. The Calcutta High Court in Rama Chakravarty Vs Manager, Punjab National Bank held that “the Bank is not required to behave like a busybody and develop any headache over the matter but is expected to adopt an attitude of cooperation, and not of a combatant, to its customers or their representatives.”

In the first place, why do banks entertain locker applications without registration of nominees?

When they can go on and on about compliance with Know Your Customer (KYC) norms, why can’t they insist on nomination? Although they are required to enter the name and registration number of nominees even on savings account passbooks, not all of them do this. This is a violation of Rules 2 (9), 3 (8) and 4 (9) of the Banking Companies Nomination (Rules), 1985. How will people know if they are nominees? A fair banking practice would be to send letters to nominees whenever a nomination is registered.

Ordinary citizens keep their valuables in bank lockers. The real crooks stash them away in sacks or in Swiss accounts and the Cayman islands! Who suffers the most?