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Friday, December 11, 2015

How safe is 'Safety Vault' ? !! - and what - when water seeps in !!!

All of us are keen to earn more ! ~ most  likely you have a ‘safe deposit locker’ with a bank … depending on the valuables that you have – as one’s riches increase, one is forced to  chose renting  a bigger sized one (may be some require a room and not a box !) ~ and ever wondered whether the terminology ‘rent a locker’ is right ?  A safe deposit box, (not a safety deposit box) -  is an individually secured container, usually held within a larger safe or bank vault. Safe deposit boxes are generally located in banks, post offices or other institutions. Safe deposit boxes are used to store valuable possessions,  (Gold, silver, diamond ornaments ….) precious metals, currency, marketable securities, important documents such as wills, property deeds, - things that  need protection from theft, fire, flood, tampering, or other perils.

Typically, upon applying, Bank allots a locker and charges rent for the same.  The box which is either affixed to a wall or is a row of such boxes made of strong iron – can be opened only with combination keys. The Bank official first opens with a key – and then – in the two keyholes, one key held by the person and the other in the possession of official are used to open ….the official would leave the room – ensuring total privacy – the box can be locked by the owner – but reopening  can be done only by combined use of both the keys.  You may find slightly differential arrangement in Star hotels, resorts and cruise ships …. (here the locker inside the room can be opened by a combination of numbers which the guest can select)

Though the banks collect ‘rent’ – ‘safe deposit charges’ (earlier they used to insist on Fixed deposits being kept) – RBI circular clarifies that the relationship between the bank and the locker hirer is in the nature of a 'bailor and bailee' and not 'landlord and tenant'.  The bank at all point of time, has no knowledge of the contents of the locker and the bank is required to exercise due care and necessary precaution for the protection of the lockers provided to the customer.  

In the past, there have been instances of fire – remember the devastating fire at State Bank of India at Beach road, Chennai in a  century old structure – built by Bank of Madras in 1897.  All big banks including nationalised and private banks take a comprehensive bank cover that includes the head office as well as the branch network, lockers are not covered under such policies. 

“As banks don't know the contents of the locker, they don't have an insurable interest”  ~ Simply put: if there is a fire accident or a burglary, you get zero protection as a customer. Valuables inside a safe may not get washed away ~ mostly fire proof too; enough precautions against burglary ….still, – Safe is no safe  when a loss occurs is what it means !!! ~ the recent Chennai floods made another revelation !

A recent article in Times of India states that - If you thought bank lockers are safe, think again. A State Bank Of India customer (name withheld) was in peril when he had to go with a hairdryer to the Ashok Nagar branch to check on his locker. … because the  branch was submerged and the customer’s vault was situated in the last row, touching the ground. The CGM of SBI was quoted as saying that the customer did not lose anything and added that services like ATMs and lockers were impacted, making bankers rethink locker safety.

While banks protect their assets against the perils of Fire, Earthquake, flood,Storm and allied perils – such policies provide cover for employees, furniture and electronic equipment like computers; lockers are however left out because of the ambiguity of the content.  While it is apparent that those who have rented lockers will have to negotiate insurance on their own – there would be practical problems galore.  Many customers would not be too willing to disclose the valuables in their possession; Insurers would ask for valuation of jewellery and can have trouble in assessing the loss as also establishment of loss itself. 

What Chennai rains taught is the fact that most bank lockers in the city are either located on the ground floor or the basement which make them vulnerable to floods. “The old locker structures are heavy and difficult to shift ,” a senior official from Indian Overseas Bank said. Officials also state that most bank branches in the city are located in the ground or mezzanine floors.  After the recent torrential rains, many parts of the city were under water for more than a couple of days – in some places there was inundation and water seepage into the lockers as well.

Though the lockers are strong and fire-proof,  they are not water-proof … the water brought along filth and slush ~ damaging the contents, especially the documents kept inside the cupboards.  Even the Gold, Silver and other bullion kept inside may require cleaning !

Another trouble for the already troubled Chennai resident !!

With regards – S. Sampathkumar

11th Dec 2015

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