The Reserve Bank of India has revised instructions in the circular dated on 18th August 2021 for safe deposit locker/safe custody articles to banks to enter into revised agreements with the existing locker holders by January 2023.
However, The Reserve Bank of India has noticed that since many customers are yet to sign the revised agreement documents. In many cases, banks are yet to inform the customers about signing revised agreement documents before stipulated time. Therefore, The Reserve of India has extended the time for banks to complete the renewal of agreements for existing safe deposit locker or safe custody article facilities to 30th June 2023 and 31st December 2023.
“Further, there is a need for revision in the Model Agreement drafted by the Indian Banks’ Association (IBA) to fully comply with the revised instructions,” the regulator said.
The central bank said accordingly, banks have been asked to complete the process in a phased manner by December 31, 2023, with intermediate milestones of 50% by 30th June 2023, and 75% by 30th September 2023.
Furthermore, The Reserve Bank of India has asked banks to take necessary steps to make it easier and seamless execution of new and additional stamped agreements process for their customers. They also advised banks setting up stamp papers, franking, electronic execution of agreements, e-stamping, etc. They should also give the customer a copy of the executed agreements.
The Reserve Bank of India said frozen lockers will also be unfrozen with immediate effect. “In cases where operations in lockers have been frozen for non-execution of the agreement by January 1, 2023, the same shall be unfrozen with immediate effect.”
The Reserve Bank of India said IBA (Indian Banks’ Association) is being advised separately to review and revise the model agreement to ensure it complies with the requirements of the circular issued on 18th August 2021, and circulate a revised version to all banks by 28th February 2023. “There may be instances, where the revised agreements already executed in pursuance of the circular dated t 18th, Augus 2021, are at variance with this revised IBA Model Agreement. In such cases, all the provisions of the said circular of the RBI, in particular Part VII thereof on compensation policy/liability of banks shall continue to apply to banks even if not explicitly stated in the agreements already executed.”
The existing customers of a bank, who have made an application for locker facility and who are fully compliant with the RBI’s CDD criteria, can be given the facilities of safe deposit lockers or safe custody articles, subject to ongoing compliance.
Separately, the Reserve Bank of India has directed SBM Bank (India) Ltd to stop, with immediate effect, all transactions under Liberalised Remittance Scheme (LRS) till further orders. This action has been taken after “certain material supervisory concerns observed in the bank”, the central bank said.
Let’s know what locker agreement is
At the time of allotment of the locker to a customer, the bank shall enter into an agreement with the customer to whom the locker facility is provided, on a paper duly stamped. A copy of the locker agreement in duplicate signed by both the parties shall be furnished to the locker- hirer to know his/her rights and responsibilities. Original Agreement shall be retained with the bank’s branch where the locker is situated
The new locker rules that came into effect on 1st January 2022.
SMS and email alerts about locker access
Before the end of the day, banks must send an email and SMS alert to the customer’s registered email address and mobile number as confirmation, informing them of the date, time, and potential recourse in the event of unauthorised locker access.
When the bank will compensate customers
Banks will be eligible to pay in case of any loss of locker content resulting from the bank’s negligence like fire, theft/ burglary/ robbery, dacoity, building collapse etc, according to the new RBI standards.
As banks cannot claim that they bear no liability towards their customers for loss of contents of the locker, in instances where loss of contents of 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.
When the bank will not compensate
The bank will not be liable for any damage or loss of locker contents caused by natural calamities or acts of God such as earthquakes, floods, lightning, or thunderstorms, or any act attributable to the customer’s sole fault or negligence, according to the revised guidelines. Banks, on the other hand, must take reasonable precautions with their locker systems in order to secure their facilities from such disasters.
Banks will continue to accept term deposits in order to collect locker rent
In banks, it is common to practice to get a significantly higher term deposit than is required to recover the annual locker rental. The new guideline clarifies his stance.
Transfer of content if the account holder dies
If the sole locker hirer nominates an individual to receive the contents of the locker in the event of his death, the banks shall give such nominee access to the locker with the liberty to remove the contents after an inventory is taken in the prescribed manner, after verification of the death certificate and satisfying the identity and genuineness of such individual approached.
(Source – https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12146&Mode=0 and https://economictimes.indiatimes.com/wealth/save/rbi-extends-deadline-for-banks-to-renew-locker-agreements-check-details/articleshow/97254418.cms)