Bank lockers - Procedure, Nomination, Guidelines and Precautions

Do you want to keep safe your contents like coins and jewelleries? Then bank lockers is the best choice. This article presents all about safety deposit lockers, the process followed by banks, monthly payment for this and tax. This article also explains the tips you have to follow to keep safe and how to remember the things which you have deposit in Bank locker. Go through the article for more details.

Bank Lockers

Bank lockers come in different shapes and sizes, which can be taken by customers depending on their requirement. The lockers are generally categorized as small, medium, large and extra large and their annual rent ranges approximately between Rs 1500 to Rs 15,000. For using the facility of lockers, a person has to pay an annual rent which will vary depending on the size of the locker, the city (metro, urban, or rural).

Banks provide safety of an excellent nature to the valuables by offering lockers to their constituent's n rental basis. The relationship between the Bank and the hirer is that of a licenser and licensee.
  1. Safety Deposit Lockers should always be rented to individuals (singly or jointly) and not to firms, societies, clubs or companies. Illiterates can also hire lockers in the bank. The hirer must be properly introduced to the Bank.
  2. At the time of hiring a locker, the hirer along with the Bank will sign a stamped agreement which is not to be attested. This agreement should be duly numbered and kept in the strong room or a fireproof safe. The hirer's signature is also obtained in confirmation of his having read and understood the terms and conditions of the agreement. The hirer's specimen signature will be obtained and recorded in the same manner as in the case of deposit accounts. The locker keys should be handed over to the hirer and his receipts therefor will be taken in the Safe Deposit Locker Register. An account will be opened for each hirer in the 'Safe deposit Locker Ledger' in which the record of all rentals paid is kept.
  3. The locks fitted in lockers have dual control, custodian's key to be applied first while opening and hirer's key to be applied thereafter. However, the lockers get totally locked by the hirer's key along, and there is no need for applying the custodian key for locking them. The custodian key is retained with the concerned supervising official, which should be exchanged with the duplicate one at each audit and inspection or change of incumbency.
  4. Safe Deposit Lockers are ordinarily leased out for a minimum period of one year and rentals at the stipulated rates are recovered in advance. The amounts so received are to be credited to commission account, sub-head 'Safe Deposit Locker Rent'.
  5. Access to Lockers is permitted to the hirer only against his signature in Safe Deposit Locker Access slip. The signature is to be obtained every time the access to the lockers is sought. No access should be allowed to a third party, irrespective of whether he happens to be a friend or relative of the hirer, unless the hirer's consent is obtained, and noted down in the access slip. The hirer's nominee may be allowed access to a locker provided power of attorney is executed in his/her favor. In the case of joint hirers, the mode of access should be clearly indicated in the agreement and signature-cards.
  6. The hirer is allowed to deal with the contents of his locker in private. On completion, he will lock his part of the locker which will automatically lock the custodian's part of locker. At the end of the working hours of the bank, the concerned supervising official will inspect each of the lockers operated during the day to ensure that the lockers have been properly locked and will record a statement in the register certifying his having done so. Any article or packet containing valuables, if found lying in the vault at the time of inspection, should be sealed with the personal seals of joint custodians of each and retained as articles in safe deposit.
  7. Safe deposit lockers are to be hired out for a minimum period of one year. The due date of a locker rent is diarized one month before the amount goes due and a remainder is sent on the date it is diarized. If the rent is not received by the due-date, a red tape is pasted in the relative locker to serve as a remainder for the concerned official, while giving access of the locker to the hirer. If the rent is not made for three months after the due date, the second reminder is sent to the hirer. In the event of the rent remaining unpaid for six months, a registered acknowledgement due letter is sent to the hirer drawing his attention to the terms of the agreement in regard to timely payment of annual rentals. If the rent is not paid for one year, final notice by registered acknowledgement post should be sent advising that unless arrears of rent are paid within a month from the date of the notice, the locker will be broken open and the content dealt with in accordance with his agreement with the bank. The out of this final notice should be reported to the controlling authority seeking their advice in the matter.
  8. In the case of the deceased hirer, notice is sent to his legal heirs or posted to the last known address of the deceased hirer and published in the leading newspapers by way of public notice.
  9. If the key of a locker is reported lost by the hirer, the Branch should make arrangements with the manufacturers of the locker to break it open. The full cost along with incidental expenses for this should be recovered from the hirer. In the case of joint hirers, all of them should sign jointly authorizing one or more of them to remain present when the locker is forced open.
  10. While surrendering the locker, the hirer should return the key. His signature should also be obtained on the 'Release'. The concerning official should ensure recovery of up to date rent and the key number with the records. The fact of the locker having been surrendered should be noted down on.
  11. Under Section 133(6) of the Income Tax Act, 1961, an Income Tax Officer has a right to demand information in the course of any proceeding for assessment of any person for the tax liability. The Income Tax Department has a right to search safe deposit lockers and vaults hired by suspected tax evaders against search warrants issued by the Commissioner seal and date authorizing one or more Income Tax Officials to carry out search and make seizures.
  12. The bank has the right of general lien over the contents of locker.

Procedure followed by banks

  • Banks should carry out customer due diligence for both new and existing customers at least to the levels prescribed for customers classified as medium risk. If the customer is classified in a higher risk category, customer due diligence as per KYC norms applicable to such higher risk category should be carried out.
  • Where the lockers have remained un-operated for more than three years for medium risk category or one year for a higher risk category, banks should immediately contact the locker-hirer and advise him to either operate the locker or surrender it. This exercise should be carried out even if the locker hirer is paying the rent regularly. Further, banks should ask the locker hirer to give in writing, the reasons why he/she did not operate the locker. In case of the locker-hirer has some genuine reasons as in the case of NRIs or persons who are out of town due to a transferable job etc., banks may aloe the locker hirer to continue with the locker. In case the locker-hirer does not respond not operate the locker, banks should consider opening the locker after giving due notice to him. In this context, banks should incorporate a clause in the locker agreement that in case the locker remains un-operated for more than the allotment of the locker and open the locker, even if the rent is paid regularly.
  • Banks should have clear procedure drawn up in consultion with their legal advisers for breaking open the lockers and taking stock of inventory.

Nomination in Safe Deposit Lockers

Nomination facilities are available only in the case of individual depositors and not in respect of persons jointly depositing articles for sage custody. Section 45ZE of the Banking Regulation Act, 1949 does not preclude a minor from being a nominee for obtaining delivery of the contents of a locker. However, the responsibility of the banks in such cases is to ensure that when the content of a locker were sought to be removed on behalf of the minor nominee i.e; articles were handed over to a person who, in law, was competent to receive the articles on behalf of the minor.

Access to the safe deposit lockers to Survivor(s)/Nominee(s)/Legal heir(s)

For dealing with the requests from the nominee(s) of the deceased locker-hirer/(where such a nomination had been made) or by the survivor(s) of the deceased(where the locker was accessible under the survivorship clause)), for access to the contents of the banks are advised to adopt generally the foregoing approach, mutatis mutandis, as indicated for the deposit accounts.

Detailed guidelines in this regard are as follows:-

If the sole locker hirer nominates a person, banks should give to such nominee access of the locker and liberty to remove the contents of the locker in the event of the death of the sole locker hirer. In case the locker was hired jointly with the instructions to operate it under joint signatures, and the locker hirer(s) nominates person(s), in the event of death of any of the locker hirers, the bank should give access of the locker and the liberty to remove the contents jointly to the survivor(s) and the nominee(s). In case the locker was hired jointly with survivorship clause and the hirers instructed that the access of the locker should be given over to "either or survivor", "anyone or survivor" or "former or survivor" or according to any other survivorship clause, banks should follow the mandate in the event of the death of one ot more of the locker-hirers.

Precautions taken by banks before handing over the contents

  • Bank should exercise due care and caution in establishing the identity of the survivor(s)/ nominee(s) and the fact if death of the locker hirer by obtaining appropriate documentary evidence
  • Banks should make diligent effort to find out if there is any order from a competent court restraining the bank from giving access to the locker of the deceased

Banks should make it clear to the survivor(s)/ nominee(s) that access to locker/ safe custody articles is given to them only as a trustee of the legal heirs of the deceased locker hirer i.e., such access given to him shall not affect the right or claim which any person may have against the survivor(s)/ nominee(s) to whom the access is given. Banks should note that since the access given to the survivor(s)/ nominee(s), subject to the foregoing conditions, would constitute a full discharge of the banks' liability, insistence on production of legal representation is superfluous and unwarranted and only serves to cause entirely avoidable inconvenience to the survivor(s)/ nominee(s) and would, therefore, invite serious supervisory disapproval. In such case, therefore, while giving access to the survivor(s)/ nominee(s) of the deceased locker hirer/ depositor of the safe custody articles, the banks should desist from insisting on production of succession certificate, letter of administration or probate, etc., or obtain any bond of indemnity or surety from the survivor(s)/ nominee(s). Further, in case the nominee(s)/ survivor(s)/ legal heir(s) wishes to continue with the locker, banks may enter into a fresh contract with nominee(s)/ survivor(s)/ legal heir(s) and also adhere KYC norms in respect of the nominee(s)/ legal heir(s). Just like we have a saving bank account and fixed deposits to keep our money safely, we have "Safe Bank Lockers" to store our physical belongings like jewelry and various kind of important documents like Will, Property Papers and other valuable items which you feel should not be kept at home. There are always 2 keys for the locker; one key is with Bank and the other with the locker holder. The locker can only be opened when both the keys are used at the same time. Generally bank official applies the key and then leaves the locker room and only after he/she leaves, you should open the locker door and do what you wanted to do. The banks use very high quality, strong lockers (generally Godrej). So overall, this all makes sure that your locker is very safe. Lockers are to be allotted on first come , first serve basis (as per rules) and in-case the lockers are exhausted, the bank is supposed to keep a waiting list of customers who have applied for the lockers and have to inform them when the lockers are free in the same order of application. If bank says that they do not have any lockers left at the moment, you can ask them for the "Waiting Register".

Things you have to follow

  • 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 which is 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 at least find out what was lost and what was 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).

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Author: Kailash Kumar17 Apr 2016 Member Level: Platinum   Points : 5

The author has written an exhaustive article on the subject matter which is very informative and likely to be useful to many readers. I would like to share few more facts/tips associated with the bank lockers -
1. Lockers can be leased out to blind persons also.
2. At the time of hiring a locker, the banks may ask for certain security deposit in the form of FDR from the lessee.
3. Lockers can be operated during specified timings only displayed in the branch.
4. Lessee(s) in drunken state are not allowed to operate lockers.
5. Hirers may consider in their own interest to insure any item of value deposited in the safe Deposit Locker with the bank. The bank has no responsibility or liability of any kind in respect of the contents of the lockers.
6. Smoking is not allowed in the ‘Vault’.

Guest Author: Ashok Goyal13 May 2016

Soon the banks are introducing the maximum number of free visits to operate their lockers. The customers might have to bear the cost for permitting visits more than the prescribed free visits. Moreover RBI has also asked the banks to engrave Bank and Branch Code on the Locker Keys of the customers. During search operations by Police, CBI and/or Income Tax authorities the engraved codes on keys found during search operations will lead the raid teams to trace the bank and branch name of the person whose premises is raided for having accumulated wealth more than the known sources of income of the individual.

Author: Venkiteswaran17 May 2017 Member Level: Diamond   Points : 6

Bank lockers used to be a precious item till a couple of years ago. One should have the luck to get a locker to hire from a bank. Knowing the scarcity and demand bank managers used to tie up some compulsory business quantum when someone request for a locker. It used to be a certain amount of fixed deposit. Bank Managers used this as a cross-selling method and enhance business.

But that situation has changed much. I got a locker from a local bank in my place very easily on my first visit itself. (There was a guess that it is because of the raid fear people got after demonetization).

So those who do not have safe deposit lockers may now try to have one. Then it will be better to know the procedure beforehand.
This article gives a good idea of such formalities. However as banks are going more and more digital, the procedure also undergo some changes. Hence you may get an update from the concerned bank.

The relationship between a banker and a locker hirer is that of a lessor and lessee. That is bank leases out some space to you and you take the space on lease. The duties and liabilities are governed that way.

Terminating the locker is terminating the contracts and all the persons who signed the original documents have to sign the termination statement (pre-printed in the same document) also.

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