RBI Circular on Safe Deposit Locker/Safe Custody Article Facility

Reserve Bank of India (RBI), vide its Notification No RBI/2022-23/168 CO.CEPD.PRS.No.S1233/13-01-018/2022-2023dated 23rd January, 2023, has announced a circular on "Safe Deposit Locker/Safe Custody Article Facility provided by banks" and has decided to extend the deadline for banks to complete the process of renewal of agreements for the existing safe deposit lockers in a phased manner by December 31, 2023, with intermediate milestones of 50 per cent by June 30, 2023, and 75 per cent by September 30, 2023.

The Reserve Bank of India, vide its circular dated August 18, 2021, had issued revised instructions with respect to Safe Deposit Locker/Safe Custody Article Facility that required banks to enter into revised agreements with the existing locker holders by January 1, 2023.

As part of the latest locker rules, the Central bank had instructed banks to use the Indian Banks' Association IBA-drafted Model Locker Agreement, in line with the Supreme Court's orders and guidelines. Banks were asked to make sure that any "unfair terms or conditions" are not covered in their locker agreements.

Why Extension

• The Banks were required to renew their locker agreements with existing locker customers by January 1, 2023.
• However, it has come to the notice of the Reserve Bank that large number of customers are yet to execute the revised agreement and are facing difficulties in doing the same.
• In many cases, the banks are yet to inform the customers about the need for renewal of agreements before January 1, 2023.
• Further, there is a need for revision in the Model Agreement drafted by the Indian Banks' Association (IBA) to fully comply with the revised instructions.

Banks are advised to notify all their customers of the revised requirements by April 30, 2023 and ensure that at least 50 per cent and 75 per cent of their existing customers have executed the revised agreements by June 30 and September 30, 2023 respectively. Banks shall report the status of compliance with these instructions on the DAKSH supervisory portal of the Reserve Bank on a monthly basis.

IBA is being advised separately to review and revise the Model Agreement to ensure that it complies with the requirements of circular dated August 18, 2021 and circulate a revised version to all banks by February 28, 2023.

Banks are advised to facilitate execution of the fresh/supplementary stamped agreements with their customers by taking measures such as arranging stamp papers, franking, electronic execution of agreement, e-stamping, etc. and provide a copy of the executed agreement to the customer. Where operations in lockers have been frozen for non-execution of agreement by January 1, 2023, the same should be unfrozen with immediate effect.

The new rules mandated that government raids be notified, recovery or seizure of the locker or articles deposited for safe custody, be notified to the customer by letter as well as by email/SMS.

Source: Click Here

Disclaimer:Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.