The Reserve Bank of India (RBI) limits bank locker compensation to 100 times the annual rent as lenders aren't allowed to know what customers store inside, Union Finance Minister Nirmala Sitharaman said on Monday.
Replying to a supplementary question by Congress MP Namdeo Dasaram Kirsan during the Lok Sabha's Question Hour, Sitharaman said, “Sitting and watching the disclosure of a client of what valuables he is going to keep in the locker is a breach of banking rules, and banks wouldn't do that, so that cannot be a measure for me to decide whether there should be differential coverage.”
Lockers are designed to be secure, with RBI guidelines mandating CCTV monitoring with a 180-day retention period, controlled access, fire-resistant vaults, and readiness for natural disasters. This, though, does not make lockers completely immune to loss or damage.
If a locker remains unused for seven years, banks may open it following strict procedures. Customers are encouraged to nominate heirs for smoother succession. In case of the locker holder's death, banks release the contents to the nominee or legal heirs within 15 days once the required documents are submitted.
The finance minister explained that the fixed compensation exists because item-wise valuation or insurance of locker contents is not practical. Asking customers to list their valuables would breach banking confidentiality rules.
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“Demanding differential coverage would require disclosure of contents, something banking rules don't permit. At the moment, there is nothing before me for any other consideration,” Sitharaman added.
Sitharaman said banks operate under a strict legal and regulatory framework to ensure the safety and confidentiality of customer data. Under the Know Your Customer (KYC) rules and RBI guidelines, banks must maintain the secrecy of customer information.
She noted that banks comply with five major laws: the State Bank of India Act, Banking Companies Act, Regional Rural Banks Act, Credit Information Companies Act, and the Public Financial Institutions Act. Data is collected only on a need-to-know basis and shared with authorities when required.
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