Module: | KYC, NPAs, Advances & Investment Valuations
Q195: Scenario: A bank branch suffers a severe burglary, resulting in the loss of contents from several safe deposit lockers. Additionally, the bank plans to break open certain lockers due to prolonged non-payment of rent. Based on RBI guidelines, consider the following statements:
1. For locker losses arising from burglary, theft, or internal employee fraud, the bank's maximum liability is strictly capped at an amount equivalent to 100 times the prevailing annual rent of the locker.
2. The bank has the discretion to legally break open a locker if the customer has not paid the rent for 3 consecutive years, after following due notice procedures.
3. If a locker remains inoperative for 7 years and the hirer cannot be located, the bank can dispose of the articles even if the rent is being paid regularly.
4. During any break-open procedure due to a lost key or unpaid rent, the inventory must be prepared in the presence of at least two independent witnesses.
Which of the statements given above is/are correct?
2. The bank has the discretion to legally break open a locker if the customer has not paid the rent for 3 consecutive years, after following due notice procedures.
3. If a locker remains inoperative for 7 years and the hirer cannot be located, the bank can dispose of the articles even if the rent is being paid regularly.
4. During any break-open procedure due to a lost key or unpaid rent, the inventory must be prepared in the presence of at least two independent witnesses.
Which of the statements given above is/are correct?
✅ Correct Answer: D
The correct answer is D. All statements are correct.
Statement 1 is correct: The regulatory framework sets a strict financial cap on bank liability for locker losses (such as fire, theft, or internal employee fraud) at exactly 100 times the prevailing annual rent of the locker.
Statement 2 is correct: The guidelines grant banks the explicit legal right to break open a locker solely on the grounds of unpaid rent for 3 consecutive years, provided due notice is served.
Statement 3 is correct: The rules tackle dormant lockers, allowing the bank to transfer or dispose of the contents if the locker remains unoperated for 7 years and the hirer is untraceable, regardless of whether the rent is being paid.
Statement 4 is correct: The standard protocol dictates the requirement of two independent (non-employee) witnesses during the break-open and inventory process to ensure complete transparency.
Statement 1 is correct: The regulatory framework sets a strict financial cap on bank liability for locker losses (such as fire, theft, or internal employee fraud) at exactly 100 times the prevailing annual rent of the locker.
Statement 2 is correct: The guidelines grant banks the explicit legal right to break open a locker solely on the grounds of unpaid rent for 3 consecutive years, provided due notice is served.
Statement 3 is correct: The rules tackle dormant lockers, allowing the bank to transfer or dispose of the contents if the locker remains unoperated for 7 years and the hirer is untraceable, regardless of whether the rent is being paid.
Statement 4 is correct: The standard protocol dictates the requirement of two independent (non-employee) witnesses during the break-open and inventory process to ensure complete transparency.