Are Bank Lockers totally Safe ?
Can bank open the Locker without your permission ?
In the worst case YES ! You need to operate your locker from time to time (at least 6 months to an year ideally.) Recently there have been cases when explosives and illegal things were found in lockers, which shows how lockers can be misused. When you are allotted a locker, there is proper KYC done by bank to make sure they know everything about you. They would place you in particular risk category like low, medium or high. If you are a high risk category person, you need to operate your locker at least once a year to make sure everything is fine. If you fail to operate your account for very long (depending on your risk profile), the bank will first remind you about the locker and will ask you reasons for not operating your locker. If you still do not take actions, the bank has all the rights to break your locker and give it to some one else, even if you are paying the yearly rent on time.
In case there is a genuine reason for not operating your locker for a very long time, you need to give it in writing to the bank mentioning the reason (like if you are now an NRI or if you are out of the city for a long time.) Also, if you fail to pay the yearly rent, they can break off the locker and re-allot it to someone else. Fair enough
Are bank lockers really safe ? Who is responsible if something goes wrong ?
Now this can be news to many, and a shocker, but in truth, Banks are not responsible for your bank lockers for any unforeseen events which is beyond the control of banks, provided they have done every due diligence from their side to protect it. You have to understand what exactly a locker facility is. The bank just gives out the space they have, on rent and make sure that its safe and secured professionally. They are suppose to make sure they have all the safety and security measures in place, to ensure that the lockers are safe and secure. So its more of a proprietor and a tenant relationship. In case there is a robbery (not in control of bank), Earthquake, Tsunami, Fire (which is not in control of bank) then bank is NOT responsible, or liable to compensate you.
Let me give you an example – If there is a robbery in the bank and your locker is one of the unlucky ones to get robbed, you lose it completely and the bank is not liable to compensate you for the reason that it wasn’t in their control to stop it, especially when they have all the security measures in place like a security guard, powerful lockers, CCTV cameras installed, and emergency alarms in place. The act of robbery is more of a unlucky event for them and you. (However there are some policies in market which insures the jewelery in your bank locker like this policy from Axis Bank). If you think that robberies in bank (with locker looted) do not happen in reality, I must tell you that it happens and has happened in past. Here is one such example.
Robbers recently broke into the strong room of a Punjab and Sind Bank branch in Jalandhar and emptied out 36 lockers in an incident that stands out as a grim reminder of the abysmally poor security infrastructure at financial facilities in the country. The incident is a reminder of a burglary at the Chirgaon branch of the Central Bank of India in Jhansi, Uttar Pradesh. As many as 45 lockers had been robbed in the November 2010 episode. (Link)
When you put your valuables in bank locker, the bank does not know what did you put in there, there is no record of it in writing with bank. That’s one reason, they can’t compensate you in case something happens to it (It could happen that you never had anything in locker and you can suddenly say that jewellery worth 10 lacs is missing! What’s the proof ?) However it does not entirely mean that banks are not liable to pay back or compensate the locker holders in every case!
Bank has to make sure they have done their side of safety measures and security
Bank is not responsible for your lockers only in case of those events which are totally not in control of bank and unavoidable, but only when they have done their share of work and security like I explained above. If banks fail to do their duty and then a robbery or some unforeseen event occurs, which results in your loss, then a customer can always claim that the bank is liable to compensate, because then the incident might have not happened or could have been avoided if banks did their part.
In another case, of Bank of India vs Kanak Choudhary, the customer had kept currency notes in locker which was eaten up by termites. Here the bank didn’t do their job of ensuring that the place is clean and safe. The customer was awarded the compensation.
Bank of India vs Kanak Choudhary
Here, the customer filed a case stating that termites had destroyed currency notes and important papers kept in her locker. The commission said that the bank “was bound to ensure that the respondents’ locker remained safe in all respects”, and awarded compensation to the customer.
Even in the robbery case shown above, the bank was found to be irresponsible and didn’t not do a lot of security measures, and definitively there was a chance of the robbery being unsuccessful if only bank had done their share of work, which means the locker holders would get compensation from bank, but then issue now is, how much compensation bank has to give and why when ? The matter would have gone to court and delays and frustration must have happened in that case.
But how much you can claim back from Bank ?
Not 100%, because you can never define how much you lost with 100% certainty. Banks themselves insure the lockers to deal with the loss in an extreme eventuality, so bank themselves get some compensation from wherever they have insured the lockers. So you can get some compensation from bank out the amount they themselves get, but to get back the compensation, you will have to show the receipts of the things which you claim was kept in the locker. Even in that case, you will not get 100% back, it will be some percentage, which can’t be defined. Also you can’t get back any compensation for the documents kept (as you cant define it’s value) and the currency notes if any. You can look at the youtube video above to see these points on claims you can get back.
While the risk is always there with bank lockers, note that this is an extreme eventuality. This information should be seen more of an awareness point, rather than a decision making criteria to choose or discard taking a bank locker. You don’t stop driving a car, just because there is a small chance of accident, right? In the same way, just because lockers are not 100% secured, does not mean you say that – “I will not go with bank lockers, because its not 100% safe.” Truly speaking it’s much safer than you bank almirah at least.
Some safety measures you should take for Bank Locker
You can never get rid of the complete risk, but you can ensure that you follow some best practices and common sense tips to make sure your bank locker is safe. Here are some good practice.
- Always open your locker after the bank employee who accompanies you to the vault leaves the place.
- Make sure your bank has all the necessary security measures, such as alarm system, iron-gated rooms, electronic surveillance via CCTV, etc.
- Visit your locker frequently and ensure your valuables are safe. The RBI and banks expect frequent locker visits from customers.
- Also, ensure the locker is properly locked before you leave the vault.
- If possible, better have 2 lockers to diversify the risk (like one locker for valuables, and another for Documents)
- If possible, always go with the bank where you have huge trust and comfort and its near your place, so that you can visit them often
- Keep laminated documents in the locker, so that they are not damaged if you keep them for a very long tenure.
- Always keep a record of what all you have in locker, so that in-case of eventuality, you can alteast find out what was lost and what was the worth
- Demand a copy of the hire-purchase agreement for the locker so that the bank cannot ask for a higher rent in future
- If a bank says the locker request is in the waiting list, ask for the waiting number
- Demand a copy of the bank’s internal guidelines regarding lockers (their guidelines never mention fixed deposit as a mandatory condition)
I hope this articles has helped you understand almost everything about the bank lockers and how they work and different rules and regulations. Do you also have a bank locker ? Generally what all you keep their and how much do you trust your bank for the locker safety ?
- Bank lockers of PWD engineer’s wife yield Rs. 57 lakh, 9 kg gold, 5 kg silver in Nashik (thehindu.com)
- 23 banks, insurance firms accused of money laundering by Cobrapost (thehindu.com)