Bank lockers: Lock up your worries with additional insurance

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Directed by the Supreme Court, Reserve Bank has come up with new guidelines for the operation of lockers, a domain marked by lack of transparency and absence of well-defined rules. Lockers have often been in short supply in most banks with customers regularly alleging that there is no transparency in the allocation of lockers. RBI has told the banks that they must make a transparent list of lockers and make it available through the CBS platform for public knowledge. They can also ask customers for FDs to cover a few year’s rent of lockers but should be lenient with customers who have a clean rent-paying record.

However, despite the best intention of the regulator, one of the areas where customers might not be adequately covered is theft, fraud, dacoity, building collapse, fire or losses of valuables stored in lockers. In such unfortunate incidents, the liability of banks is 100 times the locker rent. Lockers usually come in three sizes and a large locker is available for an annual rent of Rs 8,000 in State Bank which can be taken as a benchmark. Therefore, the maximum coverage available is Rs 8 lakh, the value of which can easily be far smaller than the valuables, most commonly gold jewellery, given the price of the metal in the market.

To protect themselves from such dreadful eventualities, customers can buy additional locker insurance to supplement the coverage extended by banks. Some home insurance schemes also provide coverage to items in lockers. However, customers should preserve original purchase bills of items in the unfortunate event of raising claims. This might not be possible in many situations like jewellery and other valuables inherited from forefathers when bills and cash memos were either not available or probably have been lost with the passage of time. Insurance companies, banks, or the Indian Banks’ Association, should do well to keep this in mind to frame rules keeping the best interest of customers in mind.