On August 18, 2021, the Reserve Bank of India issued the Safe Deposit Locker/Safe Custody Article Facility provided by the banks - Revised instructions (“Locker Facility Instructions”). These instructions lay down the law on how banks are required to operate locker facilities and interact with customers who have availed/wish to avail this facility.
Didn’t we already have instructions from the RBI on this subject? Why did they issue revised instructions?
In 2021, the Supreme Court directed the RBI to issue “comprehensive directions mandating the steps to be taken by banks with respect to locker facility/safe deposit facility management”. The Supreme Court felt that the previous regulatory framework issued by the RBI on this subject was “inadequate and muddled”.
These observations and directions were made by the Supreme Court to address the increasing number of grievances from customers regarding locker facilities availed by them with banks. Over the years a number of customers have gone to Courts and and other judicial forums to resolve their disputes regarding locker facilities specifically - lost goods, closure of lockers and disposal of its contents without adequate notice etc.
In line with the directions of the Supreme Court and to enact a comprehensive regulatory framework, the RBI issued the Locker Facility Instructions. These instructions cover a wide range of topics regarding the operation of locker facilities by banks - security procedures to be followed, communications to/from customers, settlement of claims, discharge of the contents of the locker etc.
What will we be covering in this article?
In this article, we will look at some of the significant changes introduced by the RBI pertaining to communication between banks and customers, the problems that they might create for banks and how Leegality can help banks comply very fast.
What are these new changes and how can I comply with them?
There are 4 broad changes:
- Locker Agreements
- Nomination Facility
- Identity Verification for Opening Lockers
- Customer Approval for Breaking Open the Locker
Below we describe the exact change, the operational and compliance issues this will create AND how Leegality can help.
1. Locker Agreements
2. Nomination Facility
3. Identity verification for opening lockers
4. Customer approval for breaking open the locker
A. At the request of the customer
B. Due to non-payment of locker rent
Is there a deadline by which we need to comply with these Instructions?
For existing locker customers, you have to renew their locker agreements in line with the requirements of Clause 2 of the Locker Facility Instructions by January 1, 2023.
All the other changes that we have discussed, pertaining to nomination facility, identity verification and customer approvals have been in effect since January 1, 2022. The time to comply with them is NOW.
Will copies of the signed documents be saved at the branch?
The signed completed documents can be saved in the core banking system. Additionally, before sending out the agreement for eSigning, you can mark branch officials using the CC feature. This will ensure that they receive a copy of every signed document relevant to their branch.
How exactly will this new digital journey work for my organisation?
Here’s the step-by-step visual representation of the new digital flow for executing new locker agreements AND renewing old locker agreements:
Without API integration:
With API integration:
Here’s what the new digital paperwork flow will look like for nomination facility, identity verification and customer approvals:
Why Leegality’s Document Infrastructure platform is the ideal solution for you
Leegality Document Infrastructure is currently being used by 250+ Indian BFSI orgs ((Federal Bank, Bank of Baroda, South Indian Bank, ICICI Bank, HDFC, SBI Cards and more) to digitally transform their paperwork processes in a secure, compliant way.
A snapshot of the advantages:
- A compliance first approach with India’s only 100% legally compliant digital stamping system and IT Act and RBI recognised electronic signatures
- Accelerate productivity by reducing TAT and letting bank employees focus on their core tasks
- Slash direct costs of paperwork and stamp paper inventory costs
- Enhanced customer experience - convert bank paperwork from being a painful process into a pleasant one for your customers aFraud proof - Leegality has in-built fraud mitigation measures
- Tech team too busy to do an API integration? With Leegality’s dashboard even business teams can set up Workflows and GO-live in less than a day
- Our API can be integrated and tested in less than 28 days
- Your operations should never stop. That’s why we have 3 Aadhaar eSign connections so that you always have instant backups ready
- More enforceable Leegality signed documents are easier to enforce in Court compared to physical documents since they enjoy presumptions of validity under the IT Act and Evidence Act.