'Create Guidelines In 6 Months To Ensure Locker Facility Management In Banks,' Supreme Court Tells RBI

The Supreme Court has given these directions to RBI while hearing a plea and stressed that banks cannot wash off their hands towards their customers for the operation of lockers.

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New Delhi: In a move to offer protection to bank customers in operating lockers, the Supreme Court on Friday has given six months to the Reserve Bank of India (RBI) for formulating regulations mandating the steps to be taken by banks with respect to locker facility management. It is also left open to the apex bank to issue suitable rules with respect to the responsibility owed by banks for any loss or damage to the contents of the lockers so that the controversy on this issue is clarified as well.

What is the Supreme Court's direction?

The Supreme Court has given these directions to the apex bank stressing that banks cannot wash off their hands towards their customers for the operation of lockers, as per PTI report. The top court bench comprising Justices MM Shantanagoudar and Vineet Saran pointed out that with the advent of globalization, banking institutions have acquired a very significant role in the common man’s life since domestic and international economic transactions in the country have increased multiple folds.

What is the need for new regulations?

The court noted that people are still not comfortable keeping their liquid assets at home as "we are steadily moving towards a cashless economy." "Thus, as is evident from the rising demand for such services, lockers have become an essential service provided by every banking institution. Such services may be availed of by citizens as well as by foreign nationals," the bench said. The Supreme Court also cited in times of rapid advancements in technology, "we are now transitioning from dual key­operated lockers to electronically operated lockers."

“In the electronically operated lockers, 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, the bench said, as per PTI. Also, there are chances that miscreants may manipulate the technologies used in these systems to gain access to the lockers without the customers' knowledge or consent. Taking the side of customers, the apex court said a customer is completely at the mercy of the bank, which is the more resourceful party, for the protection of their assets.

"In such a situation, the banks cannot wash off their hands and claim that they bear no liability towards their customers for the operation of the locker," it said. The top court noted that major purpose of getting the locker hiring facility is to be assured that their assets are being properly taken care of.

"Such actions of the banks would not only violate the relevant provisions of the Consumer Protection Act, but also damage investor confidence and harm our reputation as an emerging economy. "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," the Supreme Court said adding that banks should not have the liberty to impose unilateral and unfair terms on the consumers.

"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.

What is the case?

An appeal had been filed by Kolkata resident Amitabha Dasgupta against an order of the National Consumer Disputes Redressal Commission. She was looking for 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 jewelry, and compensation for damages.