Safe Deposit Locker/Safe Custody Article Facility Provided By Banks

Safe deposit lockers or safe custody facilities are a service provided by banks that allows customers to store valuable items, such as jewellery, documents, and other items, in a secure location. These facilities are typically located within the bank’s premises and are accessible only to authorized individuals. The Reserve Bank of India (RBI) has issued guidelines dated 18.08.2021 for the operation of safe deposit locker facilities by banks. 

As per the guidelines issued by the Reserve Bank of India, Banks are responsible for the safety and security of the items stored in their safe deposit lockers. They must ensure that the lockers are properly maintained and that the keys are kept in a secure location. Banks are also required to have insurance coverage for the items stored in their safe deposit lockers. 

Customers can rent a safe deposit locker by paying an annual fee, which varies depending on the size and location of the locker. Banks also typically require customers to sign a contract and provide proof of identity and address when renting a locker. 

Banks are also required to keep records of all items stored in the locker and provide customers with access to their locker during specific hours. Customers should be provided with a receipt at the time of rental and at the time of withdrawal of the locker items. 

The Reserve Bank of India has also issued guidelines regarding the bank’s liability in case of any loss or damage of the items stored in the locker. Banks are not liable for any loss or damage due to natural calamities, acts of war, riots, strikes, theft or any other cause beyond the control of the bank. Banks are also not liable for any loss or damage caused by the inherent defect, quality or vice of the items stored. Banks are only liable for loss or damage due to negligence on the part of the bank. 

Banks were obligated to renew their locker agreements with current clients by January 1, 2023, in accordance with paragraph 2.1.1 of the Reserve Bank of India circular. The Reserve Bank has observed that many clients are having trouble executing the updated agreements and have not yet done so. Banks frequently fail to remind clients that their contracts must be renewed before January 1, 2023. To fully comply with the new instructions, the Model Agreement created by the Indian Banks’ Association (IBA) also needs to be revised. 

In conclusion, safe deposit locker or safe custody facilities are a service provided by banks that allow customers to store valuable items in a secure location. The Reserve Bank of India has issued guidelines for the operation of these facilities, which include responsibilities for the safety and security of the items stored, insurance coverage, and liability in case of loss or damage. Banks are also required to renew their locker agreements with customers by December 31, 2023 and to communicate the amended requirements to all clients by April 30, 2023. The Indian Banks’ Association has been instructed to examine and update the Model Agreement to ensure compliance with the circular. Banks are advised to facilitate the execution of fresh agreements with customers and to report the status of compliance on a monthly basis. Overall, these guidelines aim to ensure the safety and security of valuable items stored in safe deposit lockers and to protect the rights of customers.[1]

[1]RBI circular DOR.LEG.REC/40/09.07.005/2021-22 dated August 18, 2021