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By S Murlidharan Jan 28, 2023 12:52:13 PM IST (Published)
It is a change that disenchants both banker and customer as on one hand the RBI says the customer to pay three years locker rent plus breaking charges in advance at the time of allotment and on the other makes the bank fully liable for any loss/damage of the content in the locker which it doesn't have any clue about.
The Reserve Bank of India (RBI) had on 18th August 2021 notified new locker rules effective January 1, 2022. If one examines it with a fine-tooth comb, the inevitable conclusion is it has stirred the hornet’s nest, besides potentially disenchanting the customers as well as banks from the very idea of bank lockers. This is borne out by the rollover of the denouement to 1st January 2024 in the face of dithering by the bank themselves for reasons set out herein.
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Accordingly, it has been decided to extend the deadline for banks to complete the process of renewal of agreements for the existing safe deposit lockers in a phased manner by December 31, 2023, with intermediate milestones of 50 per cent by June 30, 2023, and 75 per cent by September 30, 2023, as per the recent RBI circular.
The least controversial provision in the new rules is the thumbs up to the extant par-for-the-course practice of banks demanding deposits as a precondition for allotment of locker. But what is not kosher are the stifling preconditions imposed for allotment of lockers. A bank can now charge three years locker rent plus breaking charges in advance at the time of allotment under the pessimistic assumption that most of the locker holders vanish with the locker key and remain untraceable. It is a bad policy to punish everyone for the shenanigans of a few.
Should a customer vanish with the keys and defaults on locker fees, banks must be allowed to forfeit from the deposit the locker fees in arrears plus exemplary penalty plus the cost of breaking the locker and setting it right. After all, the deposit demanded by bank for allotment of locker are at the end of the day security deposit carrying interest. On the contrary, charging three years rent plus whimsical breaking charges sans interest is height of banking tyranny.
Let us now look at the flip side---tyranny against banks. The new rule making a bank partially responsible for loss of contents in the locker, seemingly a customer-friendly move, in fact may work against banks correspondingly. Should there be a fire or building collapse or loss occasioned thanks to malfeasance of any bank employee, banks are ordained to pay 100 times the rent as compensation.
Malfeasance is not an open and shut case. It might drag on for decades before it is decided one way or the other finally. And what is the sanctity behind the 100-time multiplier? How can a bank be made liable for the contents of the locker when the truth is a customer isn’t bound to disclose what he has kept inside the locker. The bar is only on keeping harmful substances including explosives. One hundred times the annual locker fee is arbitrary and one-size-fits-all and a positive put off for offering locker facilities.
RBI has blithely ignored the fact that the relationship between the locker customer and bank is one of lessor-lessee and not bailor-bailee. The customer is not handing over the contents to the banker for safekeeping in his capacity as a bailee. On the contrary, bank turns a blind eye to the contents and settles for a fee irrespective of the value of the contents. As an aside it may be pointed out that Manish Sisodia the Delhi AAP Minister poked fun at the CBI for unearthing nothing from his bank locker in connection with liquor policy raid except a rag doll! What made him play such a prank is not within the ambit of this article but suffice it to say Sisodia would have got 100 times the annual rent for the loss of his rag doll had the rules been in force and the bank was negligent in safeguarding his locker.
Remember, when one goes for gold loan the bank summons an assayer to determine the carat, purity of the gold contained in the jewellery offered as security but never in case of deposit of them into one’s lockers. The point is the bank doesn’t simply doesn’t know the contents of its customers’ lockers leave alone their quality, quantity, purity and value. Let us not mix up gold loan with gold upkeep inside lockers not in the capacity of bailee but in the capacity of lessor.
In his celebrated novel ‘Hotel’ Arthur Hailey vividly explains why a hotel management is not responsible for loss both to the customers and to the third parties who might be hurt by the irresponsible behaviour of its guest like throwing or flinging dangerous substances and things out of the window. The American jurisprudence in this regard is key is the key. By handing over the room key to a guest, the hotel makes him the owner of the room for the duration of his stay. As an owner, it is his responsibility to behave as well as safeguard his belongings. Period. The same logic ought to apply to a bank locker.
The RBI has clearly gone overboard.
—The author, S Murlidharan
, is a CA by qualification, and writes on economic issues, fiscal and commercial laws. The views expressed in the article are personal.
Read his previous articles here
(Edited by : C H Unnikrishnan)
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