Mudra Compass

Customers of the State Bank of India (SBI) may have noticed messages in recent days pushing them to sign updated locker agreements.

“Dear Customer, please visit your branch for the execution of a revised locker agreement. In case you have already signed the revised agreement earlier, you still need to execute a supplementary agreement,” reads the message sent by SBI.

Bank of Baroda has been urging clients who keep lockers at its branches to sign updated locker agreements by June 30, 2023, just like SBI has. All banks will probably soon follow suit.

RBI mandate

The Reserve Bank of India (RBI) extended the deadline for banks to finish the phased renewal of locker agreements by January 31, 2023. Just one month remains until the first milestone, which is the renewal of 50% of the contracts by June 30, 2023. The renewal of 75% of the contracts by September 30, 2023, is the second benchmark for the banks.

A Supreme Court (SC) decision from February 2021 served as the inspiration for the instructions. The SC had instructed the RBI to complete locker management regulations within six months of the order’s date.

Following the directive, the RBI released a circular in August 2021 requiring banks to have a board-approved arrangement in place for lockers. “Banks may use the sample locker agreement that the Indian Banks’ Association (IBA) will write. According to the RBI statement, “This Agreement shall comply with these Revised Instructions and the Honorable Supreme Court’s orders in this regard.

For new locker users, agreements reflecting the new regulations went into effect on January 1, 2022; however, banks had to finish the procedure for current customers by January 1, 2023.

The RBI and the banks learned that many clients had yet to sign the updated agreements just before the deadline of January 1 was supposed to pass. In reality, by January 1st, numerous banks still hadn’t informed their clients that they needed to sign the updated contract.

As a result, the RBI decided to extend the deadline for banks to finish the procedure for current users of safe deposit lockers in a staggered manner by December 31, 2023.

Agreement on stamp paper

The agreement must be on stamp paper, which the banks are required to furnish at no cost, per RBI’s requirements. The updated agreement’s main goal is to safeguard locker owners’ interests.

“Banks are advised to facilitate the execution of fresh/supplementary stamped agreements with their customers by taking measures such as arranging for stamp papers, franking, electronic execution of the agreement, e-stamping, etc., and provide a copy of the executed agreement to the customer,” the RBI circular issued on January 24, 2023, had said.

A bank official in charge of retail banking operations remarked, on condition of anonymity, “There is a lack of clarity regarding the denomination of the stamp paper.”

Banks are required by RBI regulations to give clients a copy of the agreement. To let the locker hirer know about her rights and obligations, a copy of the locker agreement that both parties have signed must be given to her. The original contract must be kept on file at the bank branch where the locker is located, according to the rules.

To make it simple for customers to refer to the terms and standard operating procedures (SOP) for lockers, it is now required that they have a copy of the agreement. Additionally, all conditions and SOPs must be displayed online and at branches of the bank.

FDs for the locker

The RBI has permitted banks to demand fixed deposits (FD) at the time of locker allocation that is sufficient to pay for three years’ worth of rent as well as any fees associated with opening the locker, if necessary. It is for those situations in which the locker holder does not maintain the locker or pay the fee. Banks are unable to open the locker for consumers with a solid track record, nevertheless.

Additionally, the bank must return the proportionate amount of advance rent it has collected if the locker holder surrenders the locker mid-term after the bank has collected the advance rent.

Discharge from liability

No matter what causes the deterioration or destruction to the locker’s contents—rain, flood, earthquake, lightning, riot, terrorist attack, or customer negligence—the bank will not be held responsible.

Compensate in case of theft, fire

Banks must, however, take all necessary precautions to ensure the safety and security of the locations where the safe deposit vaults are located. In the event of a building collapse, fire, theft, burglary, robbery, dacoity, bank carelessness, or employee fraud, the bank will be required to make restitution to the locker holder. The bank will be held liable for 100 times the current annual rent for the safe deposit box.

Alert for locker access

Register your mobile phone number and email address with the bank. The banks will notify customers via email and SMS when the lockers will be open. Additionally, the banks will offer a complaint process for unlawful locker access.

(Source – Money Control, India Times, The Economic Times and other genuine Internet Source)