There are some best practices to keep in mind when opening and operating a bank locker.

8 Reasons why a bank locker is worth investing in

Even if you live in a safe neighbourhood, chances are that you may be considering getting a bank locker. Keeping valuables like gold or important documents at home is a gamble. Rather than entrusting them to a family member for safekeeping, a secure bank locker can help you sleep better at night. After all, bank lockers or safe deposit lockers (as they are formally known) are under constant surveillance by a web of CCTV cameras and armed security guards. The latest access control systems with fingerprint scanning technology have made it virtually impossible for a break-in attempt to go undetected today.

However, opening a bank locker is not nearly as easy as opening a savings or current account. There is an elaborate process to be followed, which may vary from bank to bank. Let’s take a look at the various features of bank lockers, how to open one, and the terms and conditions (including service charges) that can apply. 

1. What is a bank locker and how does it work?

A bank locker is a safe meant for storing valuables or just about anything you like. The bank charges you an annual fee as rent for the use of the locker and has no say in what you keep in it. In other words, the contents of your locker are known only to you. Each locker comes with two keys – one for you and the other for the bank. To ensure complete security, it is designed to open only when both keys are inserted at the same time. Once open, the bank employee assisting you will step outside the vault for privacy. The locker rent can vary widely from bank to bank. As a rule, private banks charge more than public sector banks. 

2. How are lockers allotted to applicants?

According to the rules, lockers are supposed to be assigned on a ‘first come first served’ basis. In case lockers are not available, the bank is expected to put fresh applicants on a wait list in chronological order. When a locker is vacated, it is allocated to the person next in line on the list. However, some banks bundle other products (such as fixed deposits) with the locker facility. This means you just might be assigned a locker out of turn if you agree to take on a fixed deposit with the bank. 

Related: What happens to your money if RBI puts restrictions on your bank?

3. Is there a security deposit to be paid?

If you do not have an existing account with the bank, a security deposit is applicable. This amount usually includes 3 years’ rent upfront and ‘opening charges’ in case the locker needs to be opened in connection with a police investigation or legal requirement. The amount is held in an FD as mandated by RBI regulations. This covers the costs incurred by the bank in case the locker is left unused for an extended period of time. However, the bank may try to upsell you on a fixed deposit for a bigger amount. If this happens, remember that booking an FD for an amount larger than required by RBI policy is entirely up to you. On the other hand, existing customers do not have to pay a security deposit; only normal bank locker charges such as rent is payable.

As discussed earlier, the exact amount of the security deposit can vary widely across public sector and private banks. This has to do with factors like the size of the locker, with the bigger ones costing considerably more than regular lockers. 

4. What happens if you lose the key to your locker?

You can get a replacement key if you lose the original. However, you will need to pay a sizeable amount (up to Rs 3000) by way of service fees and opening charges. 

5. Can a bank open a locker without the owner’s permission?

In case of a police investigation or non-payment of rent, the bank can open your locker by law.

6. What happens in case of a break-in?

As baffling as it sounds, banks cannot be held responsible for the loss of your belongings in a break-in or robbery despite having adequate security measures in place. In other words, if it is proved that the security system in the bank was working at the time of the incident, the bank cannot be held liable for theft. The same logic applies in case of natural calamities such as flood, landslide, etc. However, if the bank is located in an earthquake-prone area and its premises were not designed to withstand one, the bank would have to make good any losses under the law. 

Related: NBFCs and banks: How are they different?

7. To what extent can such losses be recovered from the bank?

Since the bank would have no way to estimate the value of the goods, you may be asked to prove the cost of the same. This means submitting invoices as proof of purchase for any items that were lost or stolen. The bank may then compensate you for your loss from the insurance policy it would have taken to cover itself for such risks. Do keep a running list of all the items in your locker, just in case you ever need to claim damages. But remember, there is no guarantee that you will be able to recover the entire value of the items. 

Related: Here’s how Digital Savings Account can come handy during lockdown

8. What happens to a locker if the owner passes away?

Given the uncertainties of life, it makes a lot of sense to add a nominee who is authorised to access your bank locker in your absence. This can be a family member, a business associate, or a close friend. By doing this, you can prevent unnecessary hassles in the event you are unable to get to the bank for any reason. It also makes it easier to transfer the ownership of the locker to your legal heir in case of your sudden demise. Large cash withdrawals from banks, post offices will attract TDS