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Understanding the nuances of bank locker liability

05 Jan 2023

Keeping your family jewellery in bank lockers is an age old practice in India. But a recent response by the RBI to a "Right to Information (RTI)" query has virtually set the cat among the pigeons. The RBI has categorically stated that the banks cannot be held liable for the loss of valuables in a bank locker if such a loss was caused by theft or burglary. Let us first understand the legal standing on this subject...
What the law says on this subject of bank locker liability..
Surprisingly, the legal wordings of the bank locker contract actually vouch for this reality. The safe deposit memorandum of hiring the locker clearly states that the bank will not be responsible for any loss or damage of the contents of the safe deposit vault in the case of war, civil disorder, theft or burglary. The means unless the loss of valuables happens due to internal fraud or misappropriation, the banks will not undertake any responsibility for valuables in your locker. In fact, the bank locker agreement clearly stipulates that the valuables will remain in the safe deposit vault purely at the personal risk of the hirer who has hired the locker for storing the valuables. The contract also contains a very generic statement that the bank in question will take all measures and necessary precautions to ensure that the locker and its contents are protected. However, it is very clear from the agreement that in any eventuality, the bank does not assume any liability for the value of the items stored in the vault.
Why has this issue of bank locker security come up now
In recent times there have been a number of such cases where the liability of the banker in the event of loss to locker valuables comes into question. There have been few high profile cases in the recent past. A group of burglars, in a daring robbery attempt, dug a 125 feet long tunnel and decamped with valuables from more than 75 lockers at the PNB, Sonepat branch. In another case over 40 lockers of Central Bank branch UP was completely emptied out. In IOB in Chennai account holders were so shocked by a daring daylight robbery that there was a literal clamour to withdraw their savings and empty their lockers in the branch. In all these cases, the bank has refused to accept any responsibility for valuables lost from the locker. In fact, nowadays banks are insisting that anyone opting for a bank safety vault facility should first get the valuables insured before placing them in the safe deposit locker. That becomes an additional cost to the individual on top of the locker rent, which has to be anyways paid to the bank.
What depositors and locker-holders need to be aware of
The relationship between the bank and the person hiring the locker is not that of a landlord and tenant. On the contrary, it is a relationship between the bailor and bailee. That means the bank is not aware about the contents of the locker and that is something only the individual knows. A bailor-bailee relationship obviously means that the bank does not take responsibility for the contents of the safe deposit locker and that continues to be the sole liability of the individual. The locker can only be opened by the person who has kept the valuables in the locker combined with the master key of the bank. In any unforeseen circumstance like theft, burglary, war or civil strife, the bank is absolved of any responsibility pertaining to the contents of the locker. The bank only takes responsibility in the event of deficiency in service.
How can the bank-locker customer protect himself?
The RBI Policy also clearly states that the bank is unaware of the contents of the locker and therefore the banks does not accept any responsibility for the same. Therefore, when you take a locker in a bank, you can start off by ensuring that your valuables are insured. That will entail an additional cost, but it is worth the trouble. Additionally, to protect your own interest you can insist on the following measures...
You must ensure that CCTV cameras are installed along the route to the lockers so that there is an audit trail of movements. Remember, the RBI has propounded clear security guidelines including regular area checks for banks to pre-empt cases of theft and burglary and you can prevail on the bank manager to certify that the same have been adhered to. As a customer, the onus is on you to ensure that you visit your locker frequently and check that the contents are intact. More importantly, whenever you put things in the locker and take things out, ensure that you maintain a complete register of these movements as they can become important documents in any eventuality.
The moral of the story is that when you place your valuables in a bank locker, you need to take a few basic steps to protect your interest. At least that can mitigate your risk!

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