Category: How to-Guide

A lot of investors hold a locker facility in their bank, where they keep their valuables, jewelry and important documents. You must also be having at least 1 locker and must be rest assured that your locker will be safe and will not be touched, or looked upon by anyone else. However things can go wrong!

You might be operating your bank locker once in a while or many times in a year and in that case, everything will go well. However many people do not operate their bank lockers frequently and at times their lockers are closed for years and years. And they also forget to pay the fees for lockers, because you never realise that the time has elapsed and its time to renew the bank locker. Thats a big risk !

I will share with you some rules on how a bank can close down the inoperative bank locker when fees is not paid and even if the rent is paid to them and and we will also see a real life experience of one of the readers where his bank locker was closed down and handed over to someone else just because it was inactive for many years and then he struggled a lot to claim back his locker contents. (Read more on bank lockers safety, FD requirement, and more in this article)

Can Bank close your Bank Locker due to inactivity, even if rent is paid ?

Seems like the answer is YES.

Bank Lockes are divided into various risk categories by banks after they complete your KYC. Banks can assign you lockers which are either into “low risk” , “medium risk” or “high risk” category depending on what job/business you do, what is your age, what is your past relationship with bank, where do you live! and several other factors.

You then have to pay 3 yrs locker rental + breaking charges as security deposit at the time of getting the locker (No, FD for a big amount is not mandatory).

Now if you are into higher risk category, as per the RBI guidelines, if a bank locker is not operated for more than 1 yr, the bank can close your bank locker and take it custody back and give it to some other customer. Read the important part of the circular below 

(ii) Where the lockers have remained unoperated for more than three years for medium risk category or one year for a higher risk category, banks should immediately contact the locker-hirer and advise him to either operate the locker or surrender it. This exercise should be carried out even if the locker hirer is paying the rent regularly. Further, banks should ask the locker hirer to give in writing, the reasons why he / she did not operate the locker.

In case the locker-hirer has some genuine reasons as in the case of NRIs or persons who are out of town due to a transferable job etc., banks may allow the locker hirer to continue with the locker. In case the locker-hirer does not respond nor operate the locker, banks should consider opening the lockers after giving due notice to him. In this context, banks should incorporate a clause in the locker agreement that in case the locker remains unoperated for more than one year, the bank would have the right to cancel the allotment of the locker and open the locker, even if the rent is paid regularly.

How will it work if you do not operate your bank locker for a long time?

Step 1: If your bank locker is inactive for a very long time, and if bank wants to close it down, then first, bank will try to contact you and ask for the reason why you have not operated your bank locker for such a long time. Which tells you that you should make sure your phone number, email id and contact address is updated in bank records. If you have been moving from one house to another, you might miss the bank communication if your address is not updated.

Step 2 : You can either start operating the locker, or just miss out on communication part and then bank will close your locker and keep its valuables/belongings with them properly sealed in a bundle (dont worry, nothing will happen to it). Bank will also try to contact you again that your locker has been closed and the belongings are with them.

Step 3 : Once you realise in future that your bank locker has been seized ! , at that time, you can contact the bank, if needed file a RTI to bank asking for all the reasons and details and then take bank your valuables.

How Eshwar Claimed bank his Inoperative Bank Locker contents back from Bank

One of our reader Eshwar Molugu was shocked to find out that his bank locker was closed down and had been assigned to some other customer because of non-payment of fees and inactivity. This all happened because Eshwar visited after many years to operate his bank locker. This is when the whole problem started, he was not getting all the information properly and once he came to know that his locker belongings are there with bank, He really had a tough time to claim bank his locker contents. Here is his real story shared in his own words

My father have a locker in Canara Bank and it had been maintained from more than 10 years. We had paid the locker fee till 2009 and have all the bills related to it. After that we didn’t touch the locker till now Dec 30 2013. We didnt paid the locker fee from 2010.  But surprisingly when we went to bank today(6th Jan 2014)to enquire about the locker , Bank people said that the locker was given to some other person from 2010 onwards. And we didn’t get any notice asking us to pay the fee of locker.

My question is

• How can they give our locker to others without prior information to us ?
• If at all they want to give to others they should have asked/send some notice to pay the fee right ?
• Ok… assume they have given the locker to others but what about the things inside it. Will they take all the properties inside it? Is that correct?

When I read this on comments section, I replied Eshwar telling him that incase he has not got any communication from bank on closure of his bank locker, then its service deficiency part from bank and to get any kind of information and to speed up the process, he should clearly tell the bank that he will reach to banking ombudsman and even file a RTI to find out all the information if there is no cooperation from bank side, Eswar then went bank and did all those things and then things started moving ..

Here is what Eshwar updated some days later.

When i had raised my voice with respective words like Banking Ombudsman and RTI, the boll got rolling. They took almost a week after i spoke with them and got me with information

1) The locker is safely archived in a bundle.
2) We paid the locker breaking charges and annual fee with respect to banking rules to retrieve the items back.

Now, As i had read about the RBI Instructions regarding the breaking of lock, Here are the points i found

1) After due notice to Locker hirer clearly confirming in the notice that , they are going to break open the locker in case of no response from the locker hirer with in specified time as mentioned in notice.

2) Generally the Lockers will be break opened on presentation of two witness officers of the bank and the valuables in the lockers will be packed in a sealed cover and stapled and will be stored separably .

3) Once after arrival of locker hirer/owner of valuables its duty of the bank to hand over the valuables to owner after under going all due diligence.

So with respective to the above guidelines proposed by RBI, I questioned Bank Manager, Genearl Manager and AGM, asking them to produce me the list of items they noted down while breaking the locker. And they came with an answers like “May be the item list would be inside the packaged bundle.”

So my question is

1) “If the item list is inside the packaged bundle then i don’t have any problem, But if the bundle have no item list inside it how should i handle the situation ?”

2) I was thinking the item list is mandatory when the locker is broken. Does my thinking makes sense or does the bank doesn’t write one(item list) as such.

Currently, they are ready to give the package bundle anytime but i am waiting for your reply on the item list
Can you please respond and suggest me ASAP as i am waiting for your reply to relieve my locker.

And some days Later !

We got our bundle with all the items in it and also there was a list explaining about every item. We were completely satisfied after getting the bundle and didn’t fight further for not sending notice.

If i wouldn’t have posted my problem in jagoinvestor website I wouldn’t have known about Ombudsmen party at all. Thanks once again

What you can learn from this episode is that you should keep on operating your locker from time to time, Even if there is nothing to add/remove from your bank locker, you can casually just visit the bank locker and open and close it, just to check if everything is fine.

What learnings are you going to take from the above real life case ?

One of the most common ways to pay money to someone is through cheque’s. Cheque’s give you the flexibility to make payments to someone at some later date (post dated cheque) by writing it now at this moment. Writing a cheque seems to be such a simple task, but do you know that there are many weak links in writing cheques which can create a big problem for you.

If you are not careful while writing a cheque, it can be misused by someone else and potential of monitory loss to you along with unwanted headache. Today’s generation is very causal when it comes to writing  the cheques. In this article, I will cover 6 must know points which you should always practice writing the cheque’s . You can see these 6 points as a step by step recipe to write cheques. Lets see them one by one

1. Do not leave spaces between words or numbers

Its a no-brainier. When you write numbers and words in the cheque, be it Name or amount, never leave a space or gaps between them, because that gives a chance to add some alphabet or number and change the whole cheque.

Imagine you issue a cheque to “ANKIT SHARMA” , but put sufficient space between “ANKIT” and “SHARMA” and it looks like “ANKIT    SHARMA” . One can add an additional “A” after “ANKIT” and the name can become “ANKITA SHARMA” . However if you just leave exact one small space between “ANKIT” and “SHARMA” , its going to be tough to add another alphabet in between.

2. Make sure you cross the cheque saying “A/C Payee” 

If you are going to pay to some person and want to force that the payment should go to the same person bank account, in that case, you should be putting a double cross line on the left-top corner of cheque and write “A/C Payee” or “Account Payee“, which ensures that the money will get credited only to a bank account and not be handed over to someone as CASH over the counter.

A lot of people forget to do this, and if the cheque is misplaced or lost, someone can pose himself as the target person and take the money from bank, I hope you know how easy it is to steal someone’s identity and misuse the documents.

3. Add a line after the name and amount till the end 

I recently learned this point, where you add a running line like —————————- after the name and the amount in the cheque, which ensures that one cant add anything after the name and amount and misuse it .

4. Cancel the word “Bearer”

If you look at your cheque closely, in the “Pay” section, there is space for the name and then on the right corner it ends with “Or Bearer” , which means that either the person whose name is written in the cheque or anyone else who is bearing the cheque can encash it , provided the “A/C Payee” is added to cheque as mentioned in 2nd point above. So you should always cancel the word “Bearer” from the cheque, unless you really want it. This ensures additional safety of the cheque.

5. Add a sign of “/-” after the amount”

Now this might sound so small, but this has lots of wisdom inside this simple trick . There is huge difference between Rs 37,000 and Rs 37,000/- . In first option of Rs 37,000 , you can add more numbers at the end and can make it Rs 37,00000 if there is enough space ahead of it, but in case of Rs 37,000/- , You cant do anything . Below is a simple example of how it can be misused.

6. Keep the details of Cheque’s issued, even if it sounds boring !

And finally, when you give a cheque to someone, write down the cheque number, account name, amount and the date when it was issued or dated, because you might need this information incase you want to cancel the cheque. A lot of times, it happens that you need to cancel the payment, but do not remember the details. Having recorded this information would be handy at times and will help you to act faster.

ICICI Bank also has a small tutorial on correct way of writing cheque’s, which I have added below, just have a look at it and you should understand most of the things.

Some more tips (From Readers Inputs in Comments section)

• Rishi Bhatia says – “Generally, while giving a cheque, i also make a point to use a cello tape on the name and amount, so that no one can change these”
• Jitendra says – “In the present era of mobile phones, when most of us have camera enabled cell phone, it is better idea to get a snapshot of Cheque before handing over. This way all your details will be maintained.”

Use these 6 things everytime you issue a cheque

Next time you write a cheque, just make sure you have done all these 6 things, and the chances of misuse of your cheque will be close to ZERO because each and every step add a security layer. Let me know if you have any tips on writing cheque  in correct manner or any real life experience on this issue.

I have already written about NEFT and RTGS sometime back and how does it work exactly. However today, I want to share about using NEFT and RTGS transfer offline in bank branches. Even in today’s time, if some one has to send money from one account to another account, they use cheques and demand drafts. Even you can see a lot of people withdrawing cash and depositing it manually in other bank account. They are mostly people who had seen the banking era of 80’s and 90’s.

It might be your parents or uncles or anyone older !. And when you tell them they should have internet banking which has NEFT and RTGS facilities, they do not want to embrace it. But do you know that one can also use NEFT and RTGS facilities even offline by going physically to bank branches.

NEFT/RTGS are processes

NEFT and RTGS both of them are just a process/technology. Its just another fact that they are also provided as features in your internet banking account. If someone wants to transfer money from one account to another, one can always visit the branch in person and put a request to transfer money via NEFT or RTGS .

All you need is to fill up a NEFT/RTGS form (sample below) and all the details like Sender Account Details, Beneficiary Account details, amount to be transferred and IFSC code of the beneficiary branch. Then the Bank officer will punch these details on the system and the transfer will be initiated just like it happens online.

Incase you want to do a instant money transfer (not exactly instant, but can take 30 min to 1 hour) , you should be doing a RTGS transfer. One important point to remember here is that, if the amount is above Rs 2,00,000 , you would need to give a cheque leaf with the RTGS form, as part of the rules, but even if you don’t have cheque book with you at that moment – the bank generally arranges for a temporary cheque book in your name.

Recently I had to transfer some money from my wife account to my bank account and we asked for RTGS transfer, which was done promptly and the money was transferred in 10 min to my bank account.

The only pre-requisite for NEFT?RTGS transfer is that

• Originating and destination bank branches should be part of the NEFT network
• Beneficiary details such as beneficiary name, account number and account type, name and IFSC of the beneficiary bank branch should be available with the remitter

Charges for NEFT/RTGS at bank branch

RBI has not set any predefined charges, but banks are allowed to charge it as per their decision. Generally NEFT Transactions upto 1 lacs are not charges by many banks (like Central bank of India) , however some banks can charge for it. But for RTGS they generally charge anywhere from Rs 5 to Rs 50 depending on the amount. Higher the transfer amount, higher the charges.

So next time, if you meet someone who wants to transfer money by going to branch, tell them the option for NEFT and RTGS transfer via their bank branch.