Banks can't insist on FDs for lockers

The Reserve Bank of India has asked banks to refrain forthwith from the restrictive practice of linking locker facility provision to placement of fixed or other deposits.

The central bank's advice is contained in its draft guidelines on extension of safe deposit locker and safe custody facility by banks, which on finalisation would supersede all instructions issued earlier.

The revised guidelines are based on the recommendations of the Committee on Procedures and Performance Audit on Public Services.

The RBI had, in 1984, asked banks not to insist on a fixed deposit as a prerequisite for allotment of lockers. Banks were, however, permitted either to seek a deposit (but not as a condition for allotment), the interest on which may cover the annual rent or alternatively collect locker rent in advance for three years.

It was also advised that those who opt for annual payment of rent and default in payment should not be allowed to operate locker till the arrear rent is cleared.

With banks following the practice of seeking deposits for allocating lockers, the committee observed that linking the lockers facility with placement of deposit beyond what is prescribed is a restrictive practice and should be prohibited forthwith.

"We concur with the committee's observations and advise banks to refrain from such restrictive practices. If the locker-hirer is having a fixed deposit with the bank, it can be earmarked for an amount so that the interest covers the locker rental as an alternative to collecting the annual locker rental in advance," the RBI said.

The RBI, in its draft guidelines, has also clarified that the relationship between the bank and the locker-hirer is in the nature of "a bailor and a bailee" and not "landlord and tenant", though the bank has no knowledge of the contents of the locker.