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Published in Mint on 20th November, 2017.

Around 46 years ago, on a September weekend in London, thieves dug a tunnel to enter Lloyds Bank on Baker Street and broke into the safety deposit boxes of the bank, stealing close to £500,000. Thirty six years later, in 2008, in a movie called The Bank Job, Hollywood recreated this incident. Fast forward to 2017, last week in Navi Mumbai, a similar incident was replicated. Thieves made off with over Rs2.85 crore worth of gold, silver, jewellery and cash from bank lockers. According to news reports, thieves tunnelled 24 feet underground to the lockers of a Bank of Baroda branch from a shop nearby. Similar to the London incident, this too happened during the weekend when banks are generally closed for business. Bank lockers are supposed to be safe. That’s why bank customers pay fees to hire a small metal box in a dingy room with a broken mirror, a cheap curtain and a plastic chair. But if this locker is burgled, does the bank make good the loss? If not, what should you do?

Safety locker
Bank lockers are sought after by safety-seeking people who are usually pushed into buying an insurance policy or making a fixed deposit, in addition to the locker fees, to get a metal box in the wall. “Normally, this facility is offered only to our customers because bank locker is a value-add service. Lockers are generally in great demand,” said Jose K. Mathew, general manager, retail business, Federal Bank Ltd. The bank currently has about 175,000 lockers with 65-70% utilization. Most public sector bank branches usually have a long waiting list for lockers (Read more on bank lockers here). So, say, your prayers for getting a locker are answered. The question remains: are your valuables safe there? And who is responsible if the bank gets burgled?
Banks take no cover
To protect yourself from any unforeseen incident, you take an insurance cover that is based on the value of the asset you insure. However, in case of a locker, banks don’t know the contents in a safe deposit locker. “Banks cannot take an insurance cover for things that they don’t know. Hence, banks don’t take insurance for the valuables kept inside a locker. We will take the insurance cover for our bank premises. For instance, I would have taken insurance for the computers, and storage lying in the premises, but it will not be for contents inside the locker. This is true for all the banks,” said Virat Diwanji, senior executive vice-president and head-branch banking and acquisition, Kotak Mahindra Bank Ltd, which has close to 200,000 lockers with 60-65% usage. With lockers, the relationship between banks and customers is similar to that of landlords and tenants.
“We are just renting out the space. It is almost like a leasing-out agreement where you are leasing out space for customers,” said Mathew.
Banks disclose that they are not liable for your loss
You sign on an agreement when you hire a bank locker. Mint Money looked at two such agreements—those of HDFC Bank Ltd and Federal Bank Ltd—and both clearly state that the bank will not be held responsible for contents of the safe deposit locker. The agreements state: “the bank is not responsible for any loss or deterioration of or damage to the contents of the locker whether caused by rain, fire, flood, earthquake, lightening, civil commotion, war, riot or any other cause/s not in the control of the bank.” The relationship in case of a safe deposit locker is that of the hirer and hiree, and not that of a banker and a customer. The agreement further reads, “While the bank will exercise all such normal precautions as it may in its absolute discretion deem fit, does not accept liability or responsibility of any loss or damage whatever sustained to items deposited in the locker.” Hence, the bank advises the locker holder to insure any items of value deposited in the locker with the bank.
Some respite
However, Jehangir Gai, a Mumbai-based consumer activist, says that banks can be held responsible for such losses. For instance, in 2006, the National Consumer Disputes Redressal Commission in a dispute found the bank responsible for loss of contents of a locker. In this incident the locker was broken by the previous allottee, in connivance with bank officials, and all valuables and gold jewellery taken away. The bank, as well as the previous allottee, admitted theft. Since it was a clear case of fraud and deficiency in service was proved, the bank was held liable. Similarly, in 2012, the bank was held liable in a case where the locker was not properly locked and gold articles were stolen. Mint Money has copies of the verdict. In these cases, the customer proved that there was negligence and deficiency of service by the bank. But other than specific cases such as these, in general, banks are not responsible for your loss.
What should you do?
First, know that banks are not responsible for your belongings lying in the locker. In June 2017, according to a Right to Information (RTI) response published by the Press Trust of India, the locker-hiring arrangement absolves state-owned lenders of all liability. Second, take an insurance cover for all the contents that you put in a locker.
“You can either buy separate jewellery insurance or a content insurance. In content insurance, other valuables such as watches get covered. You are also asked to specify whether you want to cover the valuables lying in the safe, house, on you or in bank locker. Each has separate limits. Generally, insurance on the bank locker contents are the most inexpensive,” said Kapil Mehta, co-founder, SecureNow Insurance Broker Pvt. Ltd. There is usually some paperwork involved, as you will have to get valuation certificates. “The insurance company gives you content insurance only if the house is also insured. But if you are able to tell them that it is a rented house and you want to insure only contents, they will do it,” said Mehta. You must insure all your valuables against theft. Three, rethink the need for a locker just to store valuables. If insurance is going to pay for theft, why not keep it at home and buy a cover?