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Due to compliance issues, the Reserve Bank of India (RBI) extended the deadline for banks to renew client agreements for locker facilities to December 31, 2023 on Monday.
The earlier date was January 1, 2023, as announced in an August 18, 2021 circular.
The central bank observed that many consumers have yet to sign the updated agreement, and in many cases, banks have neglected to notify them of the requirement to do so before the January 1 deadline.
As a result, the deadline for renewals has been extended to December 31, 2023, with 50% completed by June 30 and 75% completed by September 30, 2023.
The recent circular also recommended banks to make procedures, such as assuring the availability of stamp papers, to allow the execution of the updated agreements.
Furthermore, it said that if lockers were ‘frozen’ owing to the failure to execute agreements before January 1, 2023, they should be unfrozen immediately.
The central bank stated that banks have already received instructions in this respect.
According to the RBI’s August 18 statement, locker agreements must follow the same paradigm as the Indian Bank Association (IBA). It said that banks must guarantee that no unjust terms or conditions are included in the agreements. Furthermore, “the conditions of the contract should not be more onerous than needed in the regular course of business” to protect banks’ interests.
The RBI has also made it essential for banks to seek a term deposit from clients during locker allotments in order to protect themselves from losses if the consumer fails to pay the rent or ceases to operate the locker. It will pay the rent for three years as well as the costs of breaking open the vault if necessary.
“Banks, however, shall not insist on such term deposits from existing locker holders or those who have satisfactory operative accounts,” the notification said. If the original owner dies without a will, the nominee will have full access to the locker. If there was no nominee or will, the legal heirs must follow certain requirements and submit the relevant documentation in order to claim the locker.
Over the last year, banks have generally collected the locker rent in advance. However, if a locker is surrendered early, banks will repay an appropriate portion of the advance rent earned.