Understanding Option Chain

Private Locker Service – Beware of 5 Important Points Before You Hire

Private Locker Service is gaining traction in metro and small cities. Though it is not a new concept. I belong to a small city near Delhi. I remember, in the year 1996, there were a Private Locker Service in my hometown. The reason behind mushrooming of Private Locker Service is because banks are not able to cater to growing demand. In my post, how to get a safe deposit locker from a bank i shared how difficult it is to get a bank locker.

Recently, i was in Mumbai for an assignment and catch up with an old friend. He was telling me that he has hired a Private Locker Service of a one of the reputed business group. His flat is on Pedder Road In Mumbai. Being a premium locality he could not find bank locker nearby thus opted for Private Locker Service. Though he was not convinced with his decision. He was seeking my opinion on the same. Later i thought why not share my opinion with the readers. Let’s check out 5 important points.

Private Locker Service – Beware of 5 Imp Points Before You Hire

1. Cost:

Despite a lot of self-restraint i always end up comparing cost first. The reason being, gone are the days of cheap bank lockers. Banks have found it to be a potential source of income. In recent past, all the new bank branches are providing a locker facility. At the same time, there is a steep hike in the bank locker rental.

I took a bird’s eye view of the cost of hiring a locker with PSU Banks, Private Banks, and Private Locker Service. It’s a no-brainer that Private Locker Service is costliest. On the other hand, the bank locker from PSU banks is cheapest.

Let’s check some of the reasons for high cost of Private Locker Service. Basically the premium is charged for excellent service.

(a) Long Working Hours: Lot of working people may find it convenient to operate a locker after office hours. In one of the instance, i observed that private locker facility is open until 10 PM. On the other hand, bank locker can be operated only during the bank working hours.

(b) Open on Weekend/Holidays: Banks are closed on Sunday’s and on 2nd & 4th Saturday. There is no such compulsion for Private Locker Service providers and in some cases, they are open 365 days.

(c) Quick Service: To check myself i visited one such locker facility and observed that waiting period is hardly few mins. I have a bank locker with one of the private banks and it takes min 10-15 mins to complete the process to operate a locker.

(d) NO Interest on Refundable Deposit: You may need to pay a refundable deposit for Private Locker Service but may not get any interest on the same. In the case of banks, you get an interest on Unbreakable Fixed Deposits linked to Bank Locker.

(e) NO cap on the number of times you can operate your locker. Some banks charge to operate locker beyond 12 times in a year. Therefore cost is front-loaded.

2. Trust:

It is one of the most crucial and critical points. You should always remember that Private Locker Service is neither regulated nor governed. It is a private facility. The locker agreement is a private agreement between the hirer and the hiree.

The example shared by me from my hometown. One fine day the promoter of Private Locker ran away with all the locker content. Quite interestingly he was also accepting fixed deposits at higher rates from general public based on the trust he earned over the decades. He was very well known, reputed and reliable public figure in the city. There was a lot of hue and cry at that time but police were not able to trace him. Recently, i checked with one of my friend whose father availed private locker service at that time. He told me that police has closed the case as “unresolved”. Always remember that the locker provider might have the MASTER KEY :).

The banks score 100/100 on the trust factor. Some of the Private Locker Service also mislead the borrowers. In one of the instance, it is mentioned that “Built in accordance with the Reserve Bank of India guidelines“. It is a misleading way to win the trust of the potential customer. This clause implies that size and safety standards followed are same as Reserve Bank of India prescribes for bank lockers. Always remember that private locker service is not governed by the Reserve Bank of India. By using the name of the central bank, the general public is cheated.

3. Grievance Redressal:

I might be sounding too skeptical but the probability of grievance is high in case of Private Locker Service. One of the grievances can be related to the content of the locker. Even in the case of bank locker, the onus is on the customer to prove the content in the locker. Normally this situation arises in the case of any natural calamity, fire etc. The other grievance can be on the charges/rental, claims etc.

The banks have very well-defined grievance redressal mechanism. Whereas in the case of private locker service where will you approach in the case of dispute/grievances? The reason being, locker agreement is between 2 private parties as i shared earlier.

As per my understanding, if the grievance is not resolved mutually then the only way to resolve is through the filing of the civil/criminal case depending on the nature of the grievance. In certain cases, you may also approach consumer forum.

4. Govt Crackdown:

The biggest loophole is that the Govt does not have any record of private lockers. The Govt of India is tightening the grip on the circulation of black money for cash payments. There is a wide scale apprehension that these lockers might be used to stash cash or unaccounted Physical Gold. You never know one fine day govt may decide to crackdown on private locker service. Therefore, it is HIGH-RISK service to avail because it is one of the last few (financial) services that is NOT regulated.

5. Insurance:

Lastly, if you have decided to avail private locker service then you should ask the service provider whether he has availed any insurance cover for the premises/vaults or not. As i checked there are past instances of fire, flooding, earthquake etc. In such scenarios, if the vaults are not insured then you may stand to lose all the content in the locker (financial loss). You may ask for the copy of insurance policy to understand the coverage under the policy.

Words of Wisdom:

Personally, i will not prefer to opt for a private locker service until unless i am in a dire need of the same. It is riskier compared to bank lockers. The govt has taken no of steps to bring transparency in the allotment of bank lockers. A little bit research and persuasion can make things work for you.

I always suggest my clients to file RTI Application in the case of PSU banks. Recently one of the clients filed RTI application to check no of lockers available in some of the branches near his house. He then approached one of the branches and showed him the RTI reply. He easily got a locker. Unfortunately not many customers prefer PSU banks for locker facility because of service issues but trust me service level is improving.

Copyright © Nitin Bhatia. All Rights Reserved.

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Monika Bendre
Monika Bendre
8 years ago

Are private banks trustworthy ? E.g Hdfc, yes bank etc ? What if we have lockers at yes or Hdfc ? Should one close it and go with PSU bank ?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Monika Bendre

Private banks like HDFC Bank, Kotak Mahindra Bank, Yes Bank, Axis Bank etc are trustworthy. You can retain your bank locker with Yes Bank or HDFC Bank.

DH Vyas
DH Vyas
8 years ago

Hi Sir,
I have purchased a property this week in Bhayander-E, Thane, Maharashtra. All documents are proper but the registrar’s office person missed to type my surname in registration documents.
SO IN REGISTRATION ONLY MY SURNAME IS MISSING, however my pancard number and address all are properly mentioned in registration and this surname missing error was found while checking documents after registration.
I heard making deed of Rectification but there is no mistake in agreement.

Will any problems arise in future?
What is the solution?

Kindly provide your guidance and advice

Heartily Thanks

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