Now NBFC Can Provide Locker Service
CA Ayush Agrawal
Reserve Bank of India (RBI) allowed non-banking finance companies (NBFCs) to offer safe deposit locker facilities to customers. However, the central bank also stated NBFCs that offer safe deposit locker facility or intend to offer it should inform the customer that it is not regulated by the RBI. Here is what this means.
WHY THE CHANGE?
The central bank had received proposals from NBFCs seeking approval for offering safe deposit locker facilities. It has now allowed NBFCs to offer this service. RBI further stated that the safe deposit locker facility will be considered as a fee-based service. This means that any kind of deposits that NBFCs take through safe deposit locker will not offer any interest on the deposit to the customer. It will be a service that will be provided to the customer based on a fixed fee.
The apex bank also clarified the service will not be considered as part of the financial business carried out by NBFCs. Besides this, RBI also said that NBFCs that are offering safe deposit locker facility or intending to offer it should inform the customer that the activity is not regulated by the RBI.
CURRENT SCENARIO
As of now, banks and some companies offer safe deposit lockers. If you go to a bank to open a locker, you will have to pay a rent—monthly, quarterly, half yearly or annually. Usually, banks offer four sizes—small, medium, large and extra large. Lockers are generally not available at all branches of the banks. The rates of hiring lockers depend on location of the branch and size of the locker. The cost varies across banks.
You can opt for a locker individually or jointly. Only you will be allowed to access the contents in the locker. If a locker is not operated for more than one year, most banks cancel the allotment of the locker and open the locker even if the rent is paid regularly. Remember that the content in the locker is not insured as banks have no information about the content. Also, in case of a fraud or robbery, the bank will not be responsible for the loss. However, you have the option to insure the contents on your own.
WHAT THIS MEANS FOR YOU
If you want a safe place to keep gold and diamond jewellery or important documents, you are likely to consider hiring a safe deposit locker at a bank branch. As of now not all bank branches offer lockers. Therefore, the demand for lockers is often higher than supply. Also, it gets difficult to get access to lockers as most customers hire for a longer duration, in some cases for lifetime and, hence, some banks have longer waiting periods too.
Now, with NBFCs allowed to roll out safe deposit lockers, customers can expect more availability of lockers in the market. NBFCs are yet to launch the safe deposit lockers as they will have to see if lockers make business sense. Since the product is yet to be launched, you will have to wait for details such as rent and size. If you are comfortable leaving your valuables in an NBFC-run locker, you could consider these. But remember that they are not regulated.