Locker Management vital for Cashless Economy: Supreme Court of India

The Supreme Court on Friday said the present state of affairs on management on bank lockers is inadequate and muddled, and there is no uniformity in rules as it directed the RBI to lay down regulations, within six months, for steps necessary for banks on this issue.

A bench comprising Justices Mohan M. Shantanagoudar and Vineet Saran said that each bank is following its own set of procedures and there is no uniformity in the rules.

“Given that we are steadily moving towards a cashless economy, people are hesitant to keep their liquid assets at home as was the case earlier. Thus, as is evident from the rising demand for such services, lockers have become an essential service provided by every banking institution,” it said.

The bench noted that it seems that the banks are under the mistaken impression that not having knowledge of the contents of the locker exempts them from liability for failing to secure these.

“As we are the highest court of the country, we cannot allow the litigation between the bank and locker holders to continue in this vein. This will lead to a state of anarchy wherein the banks will routinely commit lapses in proper management of the lockers, leaving it to the hapless customers to bear the costs,” it said.

It is imperative that the court lays down certain principles which will ensure that the banks follow due diligence in operating their locker facilities, until the issuance of comprehensive guidelines in this regard, it said.

The top court noted that the Reserve Bank of India had issued clear directions as far back as in 2007 imposing duty of care in respect of protection of the bank lockers and mandating transparency vis-a-vis the locker holder in allotment and breaking open of the lockers.

“However, it has been left to the discretion of the individual banks to formulate the exact procedures for fulfilling this duty of care. The banks are likely to draft the locker hiring agreements in a manner which is favourable to their interests, including clauses to the effect that the lockers are to be operated at the consumers’ own risk,” it said.

The court noted that the system is transitioning from dual key operated lockers to electronically operated lockers. In the system, though the customer may have partial access to the locker through passwords or ATM pin, etc, they are unlikely to possess the technological knowhow to control the operation of such lockers. “Thus, it is necessary that the RBI lays down comprehensive directions mandating the steps to be taken by banks with respect to locker facility/safe deposit facility management… In view of the same, we direct the RBI to issue suitable rules or regulations as aforesaid within six months from the date of this judgment,” it said.

The verdict came on an appeal filed by Kolkata resident Amitabha Dasgupta challenging a National Consumer Disputes Redressal Commission (NCDRC) order. He filed a complaint before the district consumer forum seeking a direction to United Bank of India to return the seven ornaments that were in the locker, or alternatively pay Rs 3 lakh towards the cost of jewellery, and compensation for damages.

The NCDRC had accepted the findings that consumer forum has limited jurisdiction to decide on the recovery of contents in the locker.

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