Is Your Bank Locker safe??

Last time we have conducted a POLL, questioned , whether the bank lockers are safe or not??


 Answer is NO


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A major fire broke out at the Punjab National Bank headquarters in New Delhi recently, trapping hundreds of people inside and triggering panic across the capital. In another case, in a daring robbery at a Central Bank of India branch in UP some time ago, at least 45 lockers are claimed to have been emptied out.

In another daylight bank heist in February this year, second in a row in Chennai, armed men made away with Rs 14 lakh from the Keelkattalai branch of Indian Overseas Bank, triggering panic among customers and forcing many of them to clear out their lockers and close their accounts. These are not lone incidents, but just the tips of an iceberg!

So if you thought that a bank locker is the safest place to keep your cash and valuables in, think again. Worse, if any of your valuables is lost or stolen in such incidents, banks are not bound to entertain your claims.

"The relationship of the bank and the locker holder is that of a lessor and lessee, or in simple words that of an owner and a tenant. The ambience, location and the logistics of the locker are known to the locker holder and he takes the locker despite the deficiencies, if any. Thus, the bank is not responsible for any loss for whatsoever reason of valuables from the locker," says S. Aftab, GM, Corporate Communication, Support Services & Branch Expansion Departments of Union Bank of India.

In fact, in such cases, the principle of Force Majeure works which states that "Banks shall not be liable if any transaction does not fructify or may not be completed or for any failure on part of the banks to perform any of their obligations contemplated if the performance is prevented, hindered or delayed by a Force Majeure event, and in such cases, its obligations shall be suspended for so long as the Force Majeure."

A 'force majeure' event means any event due to any cause beyond the reasonable control of the banks, including without limitations unavailability of any communication systems, breach, or virus in the processes or payment or delivery mechanism, sabotage, fire, flood, explosion, natural disasters or other 'acts of God', war, damage to the bank's facilities or of its correspondent bank(s), civil commotion, strikes or industrial action of any kind, riots, insurrection, war, acts of government, computer hacking, unauthorized access to computer data and storage devices, computer crashes, malfunctioning in the computer terminal or the systems getting affected by any malicious, destructive or corruptive code or program, mechanical or technical errors/ failures or power shut down, faults or failures in telecommunication etc., which prevents it from performing its obligations within the specified service delivery parameters.

In view of these norms, banks have consistently fended off all claims in case of locker burglary on the grounds that the relationship between a bank and the person hiring the locker is that of a landlord and his tenant. Therefore, they are not responsible for its contents.

Strangely, even the Reserve Bank has not made any specific recommendation on the ticklish issue of whether banks are liable to compensate customers in case of burglary of locker contents, although in the wake of growing instances of bank robberies, the apex bank advised all banks to exercise due care for protection of customers' lockers and suggested that banks also review the system in force for operation of safe deposit vaults/lockers at their branches on an ongoing basis and take necessary steps.

Forget about natural calamities and bank robberies. What if something is simply found missing? Suppose, for instance, you kept 10 gold coins in your locker of which two are found missing. How will the loss be compensated in such cases?

Experts say as per prevailing norms, banks are unaware of the articles kept in the locker and the lockers can be opened only when the locker holder operates his/her key along with the master key of the bank. Therefore, there should not be a case of alleged loss for which the bank can be held responsible.

Aftab explains, "The practical cases of loss are reported when the locker holder forgets to keep his things inside the locker and leaves the locker area. In case the bank gets any such articles outside the locker, there are set rules to handle it and the same are returned to the bonafide owner, after due identification, etc.. However, this is easier said than done, especially in bigger and busier locker areas, where the inflow of customers is heavy.

It may happen that before the locker supervisor, someone else notices the left-out valuables. In case the same is reported to the bank, then it will go through the process explained above. But in case it is not brought to the notice of the bank, the rest is any one's guess."

Banks, therefore, claim they not responsible for any alleged loss of valuables as the lockers are pilferage-proof, burglary-proof and in normal cases the locker of any customer cannot be opened by the bank or any other person except the locker holder.

Puneet Kapoor, Executive Vice President of Kotak Mahindra Bank, says: "Banks exercise due care and necessary precautions for the protection of the lockers provided. Therefore, in the event of loss of any valuables in the locker, unless any negligence on the part of the bank is proved, banks are not liable to make any compensation."

However, the basic objective of hiring a locker for a customer is to keep valuable articles safe and secure. That is why there have been scores of decisions by various consumer courts against banks in cases of lost valuables from lockers.

Ashish Kapur, CEO, Invest Shoppe India Ltd, says, "Banks do not want to compensate you for the loss of locker contents, but court rulings have gone against them. People hire lockers in safe deposit vaults to keep their valuable articles and documents safe. There is a risk of these valuables being stolen from residential or office premises. Since a company has undertaken the business of running safe deposit vaults and hiring lockers, ensuring the security and safety of lockers is the company's duty. The RBI has also maintained that banks will be held responsible."

Banks always claim to have in place all necessary checks, as directed by the RBI, to safeguard safe deposit lockers. But this is hardly true in many cases. For instance, after a robbery at an Indian Overseas Bank branch in a Chennai suburb this year, the police discovered that most bank branches in the city still hadn't installed devices such as security alarms, closed-circuit television (CCTV) cameras or burglar alarms, among others.

Even the Bank of Baroda branch at Perungudi, robbed on January 23 and touted as a 'next gen' branch, didn't have a CCTV camera. The police, therefore, convened a meeting with bankers, and banks were instructed to go in for holistic security solutions across branches. But how many of them complied is still unknown.

Even the claim of banks that their staff or agencies are seldom involved in locker thefts/robberies is hardly true. For instance, in November last year, a locker mechanic of a private firm was nabbed with gold worth Rs 20 lakh stolen from the lockers of Andhra Bank in Koritapadu in Guntur city a few days back. The bank staff initially rubbished the customer's claims. But after going through the video evidence, the police found that the lockers were handed over to official mechanics for annual maintenance, and the crime was committed during the period.

No wonder, court rulings have gone against banks in such cases. Even the National Consumer Disputes Redressal Commission (NCDRC) has rejected banks' argument that depositors are the only tenants of the lockers and, hence, banks cannot be held liable for any loss suffered by them.

While hearing a case involving a locker robbery in one of the branches of Bank of Maharashtra, NCDRC, in an order dated July 11, 2000, rejected the bank's contention and ruled that "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".

In another case in July 2007, the National Commission awarded compensation to a customer whose currency notes and important papers kept in a locker were destroyed by termites. It ruled that "the bank was bound to ensure that the respondent's locker remained safe in all respects".

So banks in all cases can't skip their responsibility on flimsy grounds, but it is always wise to tread with care as proving any negligence on the part of the bank is not easy. In the locker mechanic case, for example, the concerned SP gave a clean chit to the bank staff, saying, "I verified the records and agreements being entered into by customers and the bank. Bankers can't be held responsible for the loss of any property, including jewellery and cash that is stored in a bank locker."

Therefore, bank lockers are not 100 percent safe. However, if you still want to go for a bank locker, take some precautions, according to experts.

First, you need to examine the terms and conditions governing the locker lease. For instance, some banks may ask you to sign a declaration saying you will not hold the bank liable for loss of goods in the locker. If you find such clauses which you think are unfair, then avoid signing the declaration and also bring the matter to the notice of the RBI.

Second, keep in mind the reputation of the bank and its risk perception. "The physical condition of the locker area should be good, without any chance of flooding or fire (should not be next to an explosive/inflammable godown). One should also judge the risk perception of the bank, i.e., how the locker operations are handled. It should not be casual. A locker should not be at a lonely place nor should it be at a place with very thick with moving population, like a bus stand, taxi stand, railway station, etc.. Banks insist on a PIN or a password for the locker holder, which should be handy," Aftab says.

Also, operate the locker with a cool mind and utmost patience, and before closing the locker have a look around to ensure no valuable as been left out of the locker. Also, don't allow anyone inside when you are operating the locker. In fact, going to the locker with close family members like son, daughter, husband or wife is usually good, provided the locker is hired in their name too.

You also need to keep a written record of your contents in the locker. In case of a theft, at least you will know what was stolen. If you are keeping documents in lockers, it is wise to get them laminated.

It also makes sense to operate lockers as in a joint-holding or nomination-based mode. "This ensures that in case of death of the person, the lockers can still be operated or the contents smoothly handed over to the legal heirs. Safe deposit lockers in banks are classified in high-, medium- and low-risk categories by the bank. In case you fall in the high-risk category and do not operate your safe deposit locker for a year, banks can force it open," advises Kapur.

Also, if possible, try to get the valuables kept in the lockers insured. "Though banks do not know the contents of the locker held by each individual, some banks promise an insurance cover to safe deposit locker holders. The compensation given to each individual depends on the bank and the kind of insurance cover it has opted for. It is essential that one checks with the bank on the insurance claims in the case of fire, theft or natural calamity impact on a bank branch, where you hold the locker," says Kapur.

However, even getting the insurance claim paid may sometimes be difficult. Aftab says, "The insurance of household goods are very prevalent. However, the loss of valuables from lockers will be very difficult to prove and getting the claim of the same may be next to impossible. However, in case of force majeure or an act of God, insurance may come to the rescue."

That way even if you won't be able to ensure that your locker is 100% safe, you can at least be able to minimise the losses in case something untoward happens.