What does the new bank locker guidelines mean

The RBI has announced a few changes in the starting and keeping a bank locker. As the news guidelines are going to be affected from January 1, 2022, let us take a quick look of what it necessitates. 

Subas Tiwari

Under the new guidelines, the liability of the bank towards locker in case of fire, theft, building collapse and fraud by bank employees will be limited to 100 times of its annual rent. The revised locker guidelines will come into effect from January 1, 2022. Banks will have to include a provision in the locker agreement under which the person renting the locker will not be able to keep any illegal or dangerous goods in it.

The Reserve Bank said that on the basis of various developments in the banking and technology sectors, nature of consumer complaint and information provided by banks and Indian Banks’ Association (IBA), it has decided to “deposit lockers/safe custody items provided by banks” facility’ is reviewed.

Let us know here about the new rules and how they are going to affect you.

1. The responsibility of the banks will be fixed

According to the new RBI guidelines, banks will have to implement a board approved policy, in which their responsibility can be fixed for the goods kept in the locker due to negligence. According to the rules, the bank will not be responsible for any loss in case of natural calamity or ‘Act of God’ i.e. earthquake, flood, lightning and storm.

2. If theft, fraud happens, the bank will give compensation

But this does not mean that the bank is free from its responsibilities. Banks will have to ensure proper arrangements to protect their premises from such calamities. Apart from this, the entire responsibility of the security of the premises where there are safe deposit lockers will be with the bank itself. According to the new rules of the Reserve Bank, in case of fire, theft, building collapse or fraud on the part of bank employees, the liability of banks will be limited to 100 times of their annual rent.

3. If payment is not made

If the rent for the locker has not been paid by the customer for three consecutive years, then the bank can take action on it and can open any locker following the due process.

4. Cannot store illegal goods

According to the RBI new rules, banks will have to include a provision in the locker agreement, under which the locker rental customer will not be able to keep any illegal or dangerous goods in the locker.

5. Waiting list number will be released

According to the new rules, it will be necessary for banks to send SMS and email of locker operations to the customers. Banks will have to provide receipt for all applications for locker allotment. If the locker is not available, the banks will have to give the number of the waiting list to the consumers. The branch wise locker allotment information and waiting list of banks will be linked to Core Banking System (CBS) or any other computerized system compliant with cyber security framework.

6. These customers will also get the facility

As per the new guidelines, the existing customers of the bank who have applied for locker facility and who are fully compliant with CDD (Customer Due Diligence) norms can be given the facility of Safe Deposit Locker/Safe Custody Article. According to the new rule, the facility of Safe Deposit Locker/Safe Custody Article can be given to the customers who do not have any other banking relation with the bank.

7. Shifting of lockers

Banks will be able to shift the locker from one place to another only after informing the customer. Term deposit can be used as locker rent. The bank will have to take adequate steps to protect the strong room/vault. It will be necessary to keep the CCTV footage of entry and exit for at least 180 days.

Why a common man needs bank lockers?

In the earlier centuries, people went to the banks demanding a personal locker facility in view of a spate of robberies which were happening in their households. Their take that banks usually are safe havens with high-end security systems in place, security guards, alarms, etc-so banks were the safest places on earth to keep one’s valuables such as gold ornaments. But this high-end security systems in banks have spurred a burning question nowadays!

Everyone is reviewing their decision to continue to hold a locker in a bank in the light of recent incident of stealing of contents of bank lockers in Haryana by burglars. Readers might also remember the 2014 fire which engulfed one of India’s leading banks in Chennai (fortunately, the locker cabinets escaped the fire) which stoked media discussion about the safety of bank lockers under these circumstances.

So, we venture here to try and understand the way to go about hiring a bank locker and the responsibilities which come with being a locker hirer and the limited uses of this service which are offered by banks under public utility services 

Why banks hire out lockers?

During earlier times, banks were letting out lockers as a favor to high-end customers who were even otherwise dealing with the bank in the matters of deposit/loans/remittances. However, during the latter part of 1970s, after nationalisation of private banks, banks were looking to increase their customer base while looking into ways of accruing non-fee- based income to boost profits. This hunger for additional business threw a slew of public utility services such as issuance of letter of credits, guarantees and of course hiring out bank lockers.

How does one hire a locker?

It is as easy as opening a bank account. Request in writing for a bank locker of the size you need; request for a free personal look-in to the locker cabinets to know the depth of the locker you wish to hire; sign an agreement for locker-hiring; open a bank savings account to deposit locker rent and locker deposit; obtain the key to your allotted locker and come some other day or same day to keep the contents in the hired locker. You would also have to sign the locker visit register to mark your presence.

Locker operation conditions

• Banks recognise you only by your signature; so, make sure you sign as normally as you always do
• Locker deputy’s signature would also have to be affixed in the allotted page of the locker register (in case you appoint one)
• Locker agreement provides for repaying the contents of the locker to you or your nominee (in case of the deceased of the locker-hirer) or either-or survivor clause in case the locker is hired jointly (with a blood relative) or against all the locker-hirers jointly
• Some banks insist on a declaration from one other person accompanying you (non-locker-hirer) to request for bank’s permission to enter the locker room along with the locker-hirer
• Quite a few banks are also obtaining a declaration to the effect from the locker-hirer that he/she has personally verified that the locker allotted to him/her has been safely secured with the locker key, after completing the operation of the locker

Benefits of a bank locker

• In spite of the hullabaloo created in the media questioning/debating on the safety of bank lockers, it is still the safest place to keep your valuables, till some other alternatives come to replace them
• Banks still provide a secured environment by providing bank lockers which are made of high-quality steel plates with MS screws fitted on them and difficult to penetrate
• Bank lockers come cheap for the space you hire, which is incomparable with any other alternative system
• Bank lockers are secured by insurance cover against fire and other hazards and nowadays are backed by internal circuit TV (CCTV)
• Locker-hirer(s) can nominate/appoint a locker deputy to operate the locker in his/her absence (which acts as a Mandate as in a deposit account as POA holder)
• Bank officials do not see as to what is being kept in the bank locker; they at best take a declaration that the locker contents are not opposed to public policy. So the secrecy of the customer is maintained

 Disadvantages/drawbacks of a bank locker

• One can operate the bank locker only during the time the business hours

of a bank which severely restricts the freedom to get the locker contents in case of an emergent situation; incidentally, bank holidays in an area often coincides with a religious public holiday, thereby denying access to bank lockers (to enable the locker-hirer to take out the ornaments for wearing on such important occasions)

• Normally, banks charge locker rent in advance for a specific period (eg., say for 1 year) and in case the locker-hirer vacates the locker in the middle of the year, banks mostly do not refund the locker rent for the unexpired (broken) period to the detriment of the customer
• Banks usually insist, albeit orally, on depositing a sizeable sum as fixed deposits to be held with them for a longer period for letting out a locker
• Lockers are not available at small/medium-sized branches in urban/semi-urban and rural centres where the fear of theft is the maximum due to the of the remoteness of the place
• The RBI has recently come out with a response to an RTI filed wherein it has clarified that bank locker hirer in India  is that of  a lessee (tenant for that space he hired) while the bank acts in the position of  a lessor (landlord-the owner of the bank locker which is let out for hiring). So in case of a locker theft where the contents were removed without the connivance of the bank officials, the bank is under NO LIABILITY FOR LOSS OF VALUABLES IN LOCKERS.

Do insurance companies give locker insurance?

Insurance companies dealing with non-life (general) insurance products do not cover bank lockers for the purposes of extending insurance cover under a household package policy. However, in case one wishes to have insurance cover on the jewellery items (such as ornaments in gold, silver, platinum; precious stones, diamonds, etc)  and/or currency notes kept in bank locker(s), insurance cover under Jewellery Block Insurance Policy (as a part of the Household Package Policy) is being made available by most of the insurance companies in India.

However, this insurance cover is only for ornaments and other pieces of jewellery as well as cash. Also, one may have to show supporting receipts for having purchased them with their purchase value (other than what was acquired from marriage gifts).

Decoding the new gold hallmarking rules

Gold hallmarking is the accurate determination and official recording of the proportionate content of precious gold metal articles. Hallmarking is done of six caratages of gold jewellery/ artefacts, viz. 14, 18, 20, 22, 23 and 24 carats. While, the mandatory hallmarking is surely a welcome move for the consumers, let us take a quick look at the set regulations.

Ashok Kanchan

Bureau of Indian Standards (BIS), the national standards body of India through its network of regional/branch offices all over the country operates the hallmarking scheme for gold and silver jewellery. Regular surveillance audit of assaying and hallmarking centres and testing of random market samples drawn from registered jewellers.

Hallmarking provides third party assurance and satisfaction that customer gets right purity of gold (or silver) for the given price (value for money).

 Hallmarked gold jewellery  has five marks: BIS mark, purity in carat, assay centre’s name, jewellers’ identification mark and year of hallmarking.

Points to take note while purchasing gold jewellery

1. a) Check the BIS certificate of registration displayed in the shop. 
2. b) Check hallmark, consisting of five marks, on the article with the help of a magnifying glass of 10 X magnification available in the shop.
3. c) Do not forget to take the bill/cash memo which should mention hallmarking cost, net weight of gold, purity in carat and fineness on the bill/cash memo. 

The new gold hallmarking rules

PREMIUM 

The central government has made it mandatory for the jewellers to sell only hallmarked jewellery. The mandatory hallmarking of gold jewellery is coming into force from 16th June, 2021.

A few points of latest government order

• The hallmarking scheme has started with 256 districts of the country, which have assaying and hallmarking centres. 
• At present, 943 assaying and hallmarking centres are operational in the country.
•  Jewellers with annual turnover of up to Rs 40 lakh will be exempted from mandatory hallmarking. Watches, fountain pens and special types of jewellery like kundan, polki and jadau will also be exempted.
• Export and re-import of jewellery as per the Trade Policy of Government of India – Jewellery for international exhibitions, jewellery for government-approved business to business domestic exhibitions will not be hallmarked.
• According to the government order, any manufacturer, importer, wholesaler, distributor or retailer engaged in selling precious metal articles has to mandatorily get registered with the BIS. The registration process will be one-time and there will be no fees charged from jewellers for it.
• Artisans or manufacturers who are manufacturing the gold jewellery on job work basis for the jewellers and are not directly related to sale to anyone in the chain are exempted for registration, the government said.
• Gold of additional carats i.e. 20, 23 and 24 will also be allowed for hallmarking.
• The ministry in its release clarified that old un-hallmarked jewellery available in households can be sold to jewellers. It said that that, jewellers can continue to buy back old gold jewellery without hallmark from consumer and in order to give adequate time to the manufacturers, wholesalers and retailers of gold jewellery, there would be no penalties till August end.
• BIS (Hallmarking) regulations were implemented with effect from June 14, 2018. According to BIS, hallmarking will enable jewellery buyers to make the right choice and save them from any unnecessary confusion while buying gold.

Is the order applicable to gold bullion and coins also?

No, the order is applicable for gold jewellery and artefacts only. Gold bullion/coins of 999/995 fineness are permitted to be hallmarked by BIS approved Refinery/Mints (39 licensed refineries are in operation at present as on 01 Jan 2021). The list of BIS licensed Refineries/Mints is available at BIS website www.bis.gov.in under the hallmarking tab.

Information on hallmarking

All the information regarding hallmarking in detail has been provided at BIS website, www.bis.gov.in under hallmarking section. The information includes procedure and guidelines for jewellers and hallmarking centre, all the forms and list of registered jewellers and hallmarking centres etc.