1. Bank locker theft: RBI says lenders not liable for loss of contents; here’s how you can keep your valuables safe

Bank locker theft: RBI says lenders not liable for loss of contents; here’s how you can keep your valuables safe

If you thought that bank lockers are the safest place for your valuables, then think again. For, even the RBI has now said that 'banks have no liability for loss of valuables in lockers.'

By: | New Delhi | Updated: June 26, 2017 10:48 AM
Bank locker theft, RBI, banks, lenders, ICICI Lombard, Tata AIA General As per the RBI, banks will not be responsible for the contents kept in a locker by the hirer. (Reuters)

If you thought that bank lockers are the safest place for your valuables, then think again. For, even the Reserve Bank of India (RBI) has now said that “banks have no liability for loss of valuables in lockers.” This means that you should not expect any compensation for theft or burglary of valuables in safe deposit boxes of banks as the locker hiring agreement absolves them of all liability. This bitter truth was disclosed in an RTI response by the RBI and 19 PSU banks.

Worse, even the private sector banks are not better in this case as even their locker hiring agreements are almost similar in nature. For instance, the locker hiring agreement of a leading private sector bank says, “The Bank shall not be responsible or liable for any loss or deterioration of or damage to the contents of the Locker whether caused by rain, fire, flood, earthquake, lightening, civil commotion, war, riot or any other cause/s not in the control of the Bank and shall also not be liable or responsible for any loss, sustained by the Hirer/s by leaving any articles outside the Locker.”

It further says, “While the Bank will exercise all such normal precautions as it may in its absolute discretion deem fit, does not accept liability or responsibility of any loss or damage whatever sustained to items deposited in the Locker. Accordingly the Hirer/s are advised in their own interest to insure any items of value deposited in the Locker with the Bank.”

This despite the fact that bank lockers do not come for free. Customers are normally charged ranging from Rs 1,000 per annum for a small locker in a non metro city to Rs10,000 per annum for a large-sized locker in a metro city. However, banks argue that the relationship of the bank and the locker holder is that of a lessor and a lessee. Therefore, the bank is not responsible for any loss for whatsoever reason of valuables from the locker.

Experts, however, don’t agree. “Banks usually take the plea that their relationship with a locker holder is that of a landlord and a tenant. Hence they are not liable for any loss due to theft or devastation caused by any act of God, unless the loss is due to the negligence on the part of a bank official. However, that is not the true picture,” says Ashish Kapur, CEO, Invest Shoppe India Ltd.

People hire lockers from banks because they believe in the security systems provided by the banks. When banks get their lockers leased, they undertake to ensure the security of these lockers. Hence they are liable to compensate the customers for any loss incurred by them. “This position of responsibility of the banks for the lockers leased by them has been upheld by various courts as well as the National Consumer Redressal Commission (NCDRC) in several cases. Hence if the bank declines to compensate a customer for any loss due to theft or damage to his locker, he or she should approach NCDRC,” suggests Kapur.

In fact, there have been a few cases in the past where customers have received compensation for loss or damage to locker contents. However, this too is a costly and tiring process. Therefore, if you want to play safe and avoid all these, then it is better to be careful on your part.

“The important aspects to be considered are the terms and conditions regarding the locker hiring process. Read the documents carefully. Make a list of all things you are planning to keep in your locker. This will help you calculate the value of the contents and claim your compensation in case any item goes missing. Always open your locker after the bank employee, who accompanies you to the vault, leaves the place. Also ensure the locker is properly locked before you leave the vault,” says Atul Surana, Certified Financial Planner, Catalyst Financial Planning.

Get Your Valuables Insured

Another way to protect your valuables is to get them insured. Some experts say that barring a few cases of theft at bank lockers each year, they are still the safest place to park your valuables. So, “by splitting valuables between your home and the bank locker hired by you, you can reduce the geographical risk. However, if you are having sleepless nights over the safety of your jewellery and valuable stored in the bank locker, a jewellery insurance cover offered by a general insurance company or a householder’s policy would offer some solace,” says Surana.

Insurers say that bank lockers can be considered a safe option in comparison to keeping jewellery and valuables at your home. However, none of your contents kept in your locker is insured. Also, there have been many incidents of fire and burglary in leading banks in the past, whereby customers were not compensated. Therefore, bank lockers cannot be declared completely safe.

“Bankers generally take a Banker’s Indemnity Package policy, which covers money, securities both in transit and premises, and building from fire and allied perils. As per the RBI, however, banks in any case will not be responsible for the contents kept in a locker by the hirer. When you put your belongings in a locker, generally the bank is unaware about the contents and cannot provide insurance protection. However, some private banks are providing insurance for jewellery items put inside the lockers subject to the terms and conditions. With rising demand, we may see the arrival of some products which may provide insurance to bank lockers subject to particular declarations and terms,” says Rajiv Kumar, MD & CEO, Universal Sompo General Insurance.

Thus, currently there is no specific insurance cover available for jewellery and valuables kept in bank lockers. However, there are some homeowner’s policies available in the market which provide cover to jewellery kept in bank lockers. You may also keep valuables at home in a safe vault and get them insured. Some householder’s insurance cover provides coverage against accidental loss or damage to jewellery and valuables not only while your jewellery and valuables are kept at home, but also while you are travelling anywhere in the world.

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The rates charged for this particular section are around Rs 1000 per lakh of sum insured and in multiples. You can opt for various limits from Rs 2 lakh to Rs 10 lakh. “The customer has to give details of the jewellery, such as type, weight and replacement cost up to items of Rs 10 lakh. However, if the replacement cost of the jewellery is above Rs 10 lakh, the customer is required to submit a valuation certificate at the time of purchasing home insurance,” says Surana.

You should also check if there are any limits applicable under the home insurance cover for jewellery. Companies such as ICICI Lombard and Tata AIA General, among others, apply a sub-limit for the jewellery portion under the home insurance policy. So, if you have opted for a Rs 3-lakh policy, then only 25% or jewellery worth Rs 75,000 would be covered under the policy. Also, during the policy term if you make any high-value gold purchase, then you can inform the insurer about it and extend the protection to the new jewellery.

  1. H
    Hari Hara Krishna Kumar
    Jul 4, 2017 at 5:05 pm
    Kudos to RBI and all the banks. It defeats the very purpose of having lockers in banks. It can happen only in our nation.
    Reply
    1. R
      rohan
      Jun 26, 2017 at 7:51 pm
      Pledge your gold for a bank loan. On the next day repay by keeping a balance of Rs.100.00 in your loan a/c. The interest paid on the loan balance will be far less than the locker rent. Bank will be responsible for your gold in the event of theft too !
      Reply
      1. Pannvalan Pannvalan
        Jun 26, 2017 at 5:06 pm
        Many people do not understand the basics of locker hiring by banks. Here, banks are not custodians, they are mere lessors. They exit the scene once the locker is allotted. Thereafter, the locker is in the sole custody of the lessee (locker holder) and what is kept inside the locker and what is taken out and when are never known to the bankers. So, for the purported loss of contents of a locker, bankers cannot be blamed. Even a person who does not keep any valuables inside his bank locker may prefer a bogus claim if banks are made liable for the locker contents. But, one thing. If any loss occurs due to any negligence or fraud directly attributable to the bank staff, the locker holder can claim compensation, by establishing the mistake/mischief beyond doubt. RBI, Banking Ombudsman, Consumer Forum or Courts will definitely hear the case of the customer and extend all possible help and relief to him. So, my point is do not propagate lies, without understanding the issue properly.
        Reply
        1. A
          Anusuya
          Jun 26, 2017 at 1:46 pm
          If banks are not ready to take care of our locker s, then why banks, better banks to be closed let all take rest. Now a days bank employees are so free they won't work anything employees are ideal, only machine s are working, they are getting lakhs together ry. For deposit, pass book printing withdrawal of amount everything machine. So better close the banks. For our money withdrawal we have pay fine . so banks are not helpful to public not taking risk for our lockers, so better close.
          Reply
          1. M
            Mohan Rao
            Jun 26, 2017 at 1:38 pm
            It is better to pledge the jewels with the bank for a smaller amount. In this transaction the bank acknowledge receipt of the items and you have to pay some interest on the borrowings. Mostly it will be lesser than renting a large locker with the bank. This will work only for Jewels not for your important documents etc.,
            Reply
            1. R
              rajeev
              Jun 26, 2017 at 1:34 pm
              Banks were nationalized to keep public money safe and to install sense of security among the people that their valuable assets are safe. Further Banking is service industry and they are charging their fee for that. Hence banks cannot go away with their responsibilities
              Reply
              1. R
                Rajeev Aurangabadkar
                Jun 26, 2017 at 1:00 pm
                An easier way is to store all your information online on giftmylegacy . It is fully encrypted, secure (256 bit and safe way to store all your personal information on the cloud. With unlimited space on offer, you can digitize all the information (even your contents of the bank locker, so that if it gets misplaced you have a record of it) and upload it. The information can be downloaded when needed (24x7) and shared with your family.
                Reply
                1. Umeshchandra Mishra
                  Jun 26, 2017 at 12:31 pm
                  Bank has no knowledge of the things kept in the lockers, ssometimes even the owner may not know the exact contents there. So how can banks give compensation as the claims are not verifiable and ccustomers will put up exaggerated claims.
                  Reply
                  1. J
                    Jayakrishnan
                    Jun 26, 2017 at 11:59 am
                    This report may create panic. However as long as banks follow stipulated safety measures, Bank lockers are the safest available place for valuables. Locker rooms use one metal door and one grill door which need multiple keys to open or close. These keys are kept with multiple custodians. Burglar alarms and sensors are fixed which alerts security/bank authorities and Police in case of abnormal situations in locker room. Also locker is opened using two or more keys in the presence of locker owner and bank official only. Before the customer operates the locker the banker will leave the place and the locker owner will be all alone. Customer may keep jewelry, valuable documents or he may keep it empty before leaving the place. The banker will not be a witness to this activity also the bank is not suppose to keep any record of contents of their customer's locker to validate claim of loss. Gold loan is another smart option.
                    Reply
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