Why compensation is not given for the full value of bank locker contents?

Finance Minister Nirmala Sitharaman said on Monday that in case of loss of goods kept in the locker, the bank can give compensation of 100 times the annual fee to the locker holder. While replying to a question in the Lok Sabha regarding compensation being given on the value of the entire contents kept in the bank locker, the Finance Minister said that this limit has been set because the bank does not know what items have been kept in the bank locker by the customer and it is against the banking secrecy rules for the bank to ask any customer for information about the things kept in the locker.

The Finance Minister further said that since item-wise valuation or insurance is not possible, a standardized compensation framework is put in place to compensate for loss of items kept in bank lockers. In case of seeking different coverage, the details of the goods will have to be made public, which is not permitted under banking rules.

According to bank locker rules, if the contents kept in the locker go missing due to negligence of the bank, fraud by the employee, fire, theft, dacoity, burglary and robbery etc. then the bank has to pay compensation to the locker holder, which will be 100 times of the annual fee being charged by the bank for the locker.

For example, if a bank is charging Rs 5,000 per year for a locker, then it will have to pay a compensation of Rs 5,00,000 to the customer in case of damage to the locker due to the above reasons.

It is legal to keep jewellery, loan documents, property documents, birth-marriage certificates, insurance policies, savings bonds and other confidential documents in a bank locker.

At the same time, it is illegal to keep cash, weapons, drugs, explosives, perishable and radioactive items and items considered dangerous in a bank locker.