So you got carried away and bought a lot of gold jewellery for your wife and are now hunting for a bank locker to park that jewellery ? Getting bank lockers in India is more painful than buying the jewellery ! Most of the time the banks will say that the safe deposit lockers aren’t available at all !
Banks insist of various conditions on the user to open a locker. But are these conditions mandatory to be imposed ? Or are banks being cheeky and playing safe and in some instances, forcing the user to invest with them as well ?
Bank Safe Lockers
While in my opinion, bank lockers are needed for a larger section of the public, unfortunately the banks allow only the privileged class to use it at their branches. Many banks will ask you to open a fixed deposit before you can open the bank lockers. 99% of the banks do this and the FD asked for is easily Rs 50,000 or Rs 1 lakh.
In case the fixed deposit is something which you resist, they will ask you to invest some amount with them in some other investment avenues. Banks will also ask you to open a savings account with them if you want to operate lockers with them.
Note that it is not mandatory to open any savings account or make any investments with banks to open a bank locker. A safe deposit locker facility is totally independent of any other service the bank offers.
But it is so rampantly used that the Reserve Bank of India (RBI) had to file circulars with banks advising them not to use these tactics on users.
The maximum a bank can ask for is a security deposit of three years’ rental in advance and a one-time breakage charge.
So why do banks do this ? That is because investors are guilty of not using the lockers for years and years together. So the rental charges are not paid to the banks and the bank loses on its income. Forcing a bank safe locker user to open a saving account ensures that the bank can at least debit the rental charges from this account.
Are lockers really safe ?
The lockers in banks are available in different sizes and operating them is pretty easy. Each locker has two keys; one remains with the bank and the other with the customer. The locker can be opened only when both keys are used. Losing yours could be very costly as the entire lock needs to be replaced and you would have to bear the full cost.
Total privacy of operation and strict confidentiality of contents are two main main advantages of bank lockers.
Many investors open lockers with the assumption that the responsibility of the contents of the locker is now with the bank. Are lockers in banks and their contents safe ?
Essentially banks maintain that they are not responsible for loss or theft of the bank locker contents. The bank even does not know what is parked in its locker so how can it be held responsible ?
So banks do not want to compensate you for loss of locker contents but court rulings have gone against them.
One ruling observed – “the depositors had taken the lockers on rent only because of the security provided by the bank and it is not simply a landlord and tenant relationship.”
And another stated – “persons hire lockers in safe deposit vault to keep their valuable articles and documents therein for their safety. There is risk of valuable articles and documents being stolen in residential or office premises. Therefore, it is to keep them safe from theft or burglary that persons hire lockers in safe deposit vault. Since the company has undertaken the business of running safe deposit vault and hiring lockers, it is its duty to ensure security and safety of lockers.”
RBI has also maintained that banks will be held responsible. Banks have taken insurance to cover for such losses either due to theft or natural calamity like flood or fire. The iron gated strong rooms, electronic surveillance via CCTV and alarm systems are some of the checks banks have put in place to safeguard safe deposit lockers.
All of us do know that the safety precautions and arrangements made by banks are very comprehensive and so the valuables are more safer at the bank than at our homes.
Other points to note on bank lockers
- One needs to keep in writing at home what are the contents of the bank safe lockers. In case of theft, at least you will know what was stolen !
- If you are keeping documents in lockers, it is wise to get them laminated. This isn’t possible for realms of documents, so you might not have a choice here.
- Always operate bank lockers in a joint-holding or nomination based mode. This ensures that in case of death of the person, the contents can be still be operated. The contents are smoothly handed over to the legal heirs.
- RBI has stipulated that banks should play a more proactive role. To finding the whereabouts of the account holders whose accounts have remained inoperative. It has said that banks needs to ensure that the lockers are operational more frequently.
- Safe deposit lockers in banks are classified in high, medium and low risk categories by the bank. If You are high risk category customer and do not operate your safe deposit locker for a year. The banks can force it open !
- In India, locker facility is also availed by private players as well.
- The cost of a bank locker can start from as low as Rs 1,000 annually to Rs 40,000. It all depends on the size of the locker. Annual charges are taken at the beginning of the year. In case you wish to close your bank locker midway, the money is not refunded.
@Radhey,
Thank you very much for writing this article. I did approach few banks for the locker and the reply i got was more or less the same.
The bank does not guarantee/insure our valuables. So incase of theft, earthquake, fire we won’t get our valuables back. So i am confused how useful would these locks be?
In one bank i was told to give my name and the wait list is for 6 months, In another the branch manager said that she will decide whether to give the locker or not, strange. Not sure what criteria would she consider?
The charges quoted were Rs. 750 plus service tax for small locker.
Also we have to keep Rs.25,000 in savings and an FD of Rs. 50,000.
Would insuring our jewellery from private insurance companies be worth. Is there a limit for the same?
@Rakesh, First we need to understand why we need a locker. Is it to ‘insure our valuables’. I see it as a more safer place than my home and so use it. Fro my home, the probability that a theft happens easily is more than at the bank.
Usefulness of the locker is storage, insuring them comes second to me.
Given the arguments on ownership in case of loss, do decide which way to go.
Lockers do have waiting periods my friend.
@TheWealthWisher,
Thanks Radhey, safety is the main reason i was thinking about. Agreed that the chances of theft is remote in case of bank lockers but then why not the bank insures everything and makes not of the valuables kept. So that incase of claims due to theft, fire,etc they can settle it.
@Rakesh, To insure everything they need to declare the total value of the vault to the insurance company, which is not known to the bank.
THE BANK DEMANDS FOR INSURANCE POLICY FOR LOCKER.(maxwel , HDFC LIFE ETC
OR SOME BANK DEMAND FOR INVESTING ONE LAKH FOR EVERY YEAR ,,, FOR FIVE YR OR 7YEAR OR FOR 10YEARS, IF WE INSIST ON F.D THEY COMPEL US FOR COMBO PACK WITH INSURANCE AND F.D … why do they do ? i feel this is not fair ,,,does this go on in vadodara or any other place too
Hi Radhey,
You have mentioned that it is not mandatory to open a savings account or FD in a branch before applying for a locker. Even RBI is not favoring this move.
But the fact remains the same, banks are still asking for all such things, what should a customer do in these cases?
If a customer even threatens to complain to ombudsman or RBI, banks can simply make an excuse saying there are no lockers available. I don’t think there is any way we can get a locker without officially “bribing” them, is there?
@Vivek K, Like the word you used ‘officially bribing’ :), very true.
As the bank needs safety, they want the account to be open and need FD too. Why can’t they think of safety by charging in advance. If still they don’t feel safe, let them charge for 2 years in advance. They want safety and they don’t take guarantee of over valuables ;).
@Chirag, Absolutely correct Chirag. On one hand they ask for FD of Rs 1 lakh in addition to the annual fee to give a locker and on the other hand they take ZERO accountability in case of any robbery.
What’s the point of paying so much and opening a locker when there is no guarantee of safety?
@Chirag, No one is going to pay 2 years in advance in this country !
@Vivek K,
See, I don’t mind doing a FD or opening an account if I get a locker of my choice. Recently I moved to a new area and we walked into a PSU bank.
They asked for a 49k FD and a saving account and said they will give a small locker.
I saw their locker, noticed big ones were available and jacked up the FD to 99k and took the bigger one.
The FD now forms part of my contingency fund and the locker is one I wanted. The folks are the bank are happy and that was what mattered to me, we cannot literally throw our weight around at the banks. They will simply not help.
So yeah, as you say “bribe them” !
@TheWealthWisher, Radhey one small question. As you said FD you did to open locker is part of your contigency fund, so can we break them any time or bank has some force time limit on that (as it’s for getting locker)? Might be a silly question. Still though of asking ;).
@Chirag, Good question Chirag, I was thinking about the same.
From my experience [not with lockers though], you can try this trick with government banks but not with private banks. The govt banks might not have any checks on this but private banks can put some penalty clauses around that.
@Vivek K, No they cannot – note that asking to do an FD is illegal anyways so no penalties can be applied formally to you if you beak the FD.
Try it !
@TheWealthWisher, Ah great! I thought private banks would have something in place as they are into unethical practices like sending goons for loan recovery etc.
But good to know, so we have a workaround after all 😉
@Radhey,
There is a 1% penalty for breaking an FD, I confirmed with OBC. But if this FD is tied up to the locker we cannot break them or else we will have to close the locker.
@Rakesh, But how do they know if it is tied up with the locker or not?
@Vivek K,
Yes they will, on the FD they will mark a note saying that it is against the locker deposit.
@Rakesh, Let me check with mine. I will be a bit shocked if that is the case.
@Radhey,
Yes, please do. This all information i had gathered from Oriental Bank of commerce.
@Rakesh, What if it is an online FD?
@Vivek K, Not sure how you can open a locker through an online FD. They want NEW FDs, not EXISTING ones is my reading.
@TheWealthWisher, I have a savings account with SBI. I went to the branch to inquire about the locker and as expected they said you need to have one FD. I said can I create it online since I have a savings account with internet banking enabled. They said it is fine, just show us the transaction slip and it would suffice.
Although I didn’t do it but I could have created it online and the same would have appeared online along with my savings account. Now I am not sure if it would allow me to break the FD online [generally it can be done] or would it throw some error message?
@Rakesh, If you ask them to give that in writing that it is linked to your locker, they will not.
They are saying this verbally. So truly speaking, it cannot be linked. There cannot be any rule saying that if you break the FD they will close the locker.
Please don’t get taken for a ride 🙂
@TheWealthWisher, You are right Radhey we need to speak up when required, can’t be a push over all the time.
If the bank insists on closing the locker because I am breaking the FD, I’d start communication in writing and of course they will never give that as a reason in writing.
@Vivek / @Radhey,
Most of the times we are the mercy of the banks. We need to avail the facility so we have to follow their rules, i know its wrong but would taking the matter to banking ombudsman help? They might not entertain us in future.
I still remember how they made me open a savings account for ppf.
@Rakesh,
I don’t think we are at the mercy of the banks. We can fight it out and chances are we will win the battle but the general attitude is “its ok let it be, why bother” and everyone including banks takes advantage of this attitude. You are looking for problem at the wrong end.
@Radhey,
I don’t think you would need new FD’s. If you already have an FD with the bank and opt for locker services they will link it to the FD. Got this update from OBC.
@Vivek,
Good point on online FD. Not sure how it would work if we close the FD prematurely. The banks would be tracking somewhere though.
@Chirag, Nah, after you break it, no one knows and asks ! They don’t tag the FD to the locker for eternity.
Agree with Rakesh, we need lockers for safety and if there is no of valuable things kept there, how useful they are. I think this is the reason, court ruling mentioned here are not in favor of bank.
Bank also has point that they don’t know what’s kept inside lockers. Anyway bank has to safeguard it, so wouldn’t it be good if the they keep log of what is being kept inside or taken out. I know privacy does matter here, still customer can have proof that bank has the list of things mentioned in the log and should be responsible. Though not sure as there are many intelligent minds available with RBI and finance department, so they can obviously think better than us.
@Chirag, I think banks are in quite a dilemma because in case of any robbery few customers will surely try to take advantage. But if there is no accountability genuine customers will loose everything and there is no point in using bank locker.
I think banks should ask customers to declare the value of things kept in the locker and take insurance. But this move needs support from RBI and IRDA. There has to be a better solution to all this.
@Vivek K, Good point, wish they read your comment here :).
@Vivek K, This wont work Vivek. I personally think that if people begin declaring valuables at a bank, the word can get around very quickly and a robbery can happen on the day the locker was stuffed with valuables !
This isn’t feasible.
@TheWealthWisher, But then do you think it is fair on customers part that a robbery happens in the bank and they lose everything? The security standards are pretty average in Indian banks so what benefit is customer getting by opening a locker in the bank?
@Vivek K, See, if you are convinced the banks does not offer anything more for you valuables and they are better off at home, then one should not opt for lockers.
Banks are accountable for the locker contents so why worry.
I think it’s a line we need to tread after taking a personal call.
@TheWealthWisher, It’s not that I think they do not offer anything more, of course they do.
My point is when RBI and court are eventually going to hold banks responsible for any theft then why can’t banks simply accept it and put some measures in place and take accountability. Why customer has to go through the pain of dragging everything to the court and fight the battle?
@Vivek K, Ah, that is the business of making money !
@Vivek,
There have been cases of theft in lockers and people have approached court and won too but then the whole procedure takes a lot of years and infact people had spent a considerable amount of money in lawyers fees to..
@Rakesh, Good to know that customers are winning the battle at least.
@Rakesh, Alas, that is how its works in India !
@Chirag, No banks are not supposed to know what is in the lockers.
In fact that is why lockers in ‘high’ risk categories get broken in case of non operation for a long time as some have in the past fond to contain explosives.
@TheWealthWisher,
Yes, I did check with the banks and they said they don’t check the valuables what the customer puts in the locker, Its at the discretion of the customer.
Agree with Rakesh, we need lockers for safety and if there is no responsibility** of valuable things kept there, how useful they are :).
Opened a locker with Oriental Bank couple of days ago, opted for a small one.
Cost – Rs. 750 per year + Service Tax. They asked to create an FD for Rs. 50,000. As i already had an existing FD they linked to it by writing a comment on the FD receipt. The bank is opposite my home and also feedback from a neighbor was good.
we have a locker @ andhra bank, last successful operation was on March 2012, after a month i.e. on April we again visited to operate the locker, the bank officials showed us that the locker is not opening with both the keys and told us that it is completely jammed and need to call their authorized godrej lock opener, they then called after a written commitment taken from us and informed us to come after some couple of days but unfortunately, due to a major operation (open heart surgery) for wife we could’nt able to visit andhra bank since till 6-7 months, and now in this october’2012 we visited and showed us the condition is the same as it is jammed, and on the same day they called the godrej person and he also tried to open with the keys available but nothing could happen he advised for cut opening the locker, as we agreed for the thing with a written commitment, and as they opened we were shocked to see that nothing is inside. Now the bank officials says we are not at all responsible.. do what ever you like.. Please advise how to go.. I shall be thankful if any suggestion or idea would help me out in getting out of here…
This is very unfortunate. I think you shoudl first write to the banking ombudsman and see what he has to say. I think you have a strong case against the bank.
@Santosh,
That’s shocking. I think you should immediately lodge a police complaint.
Must be some staff members job.
Terms & condition of Oriental bank of commerce, bank loker agst. f. d. amount & period.
I have an acc with SBI where i requested for a locker. The asked me to invest in 50k annually in SBI Life Ins which is market linked for a minimum of 5 yrs. How can i avoid this?
@Neha,
Most banks do it, you cannot avoid it. I too had to open an FD for 1 year for 50,000.
You can complaint to Banking Ombudsman but I don’t think that would help.
Dear All, its high time that we just not rely on Banks as there are many other private players who provide the service at reasonable cost. To my knowledge and research private players are also reliable and the construction of the service center is as per the RBI guide lines and much better than Bank. Service is good and accessibility is to our locker is 365 days.