Govt Defends 100x Locker Compensation Cap; FM Says Banks Do Not Know Contents

Moneylife Digital Team 30 March 2026

Economy & Nation

The Union government has defended the existing cap on compensation for loss of valuables kept in bank lockers, stating in Parliament that banks neither assess nor have knowledge of the contents stored by customers, making higher or differential compensation frameworks impractical.

Responding to a question raised by Dr Kirsan Namdeo, Congress member of Parliament (MP) from Gadchiroli-Chimur in Maharashtra, in the Lok Sabha, finance minister Nirmala Sitharaman said that compensation for loss of locker contents is currently fixed at 100 times the annual locker rent.

She explained that this standardised limit exists because banks do not maintain any record or valuation of items stored in lockers and requiring customers to disclose such details would be inconsistent with confidentiality norms governing locker operations.

Banks provide locker holders compensation fixed at 100 times the annual locker rent in case of loss.

This limit exists because banks do not know or assess the contents of lockers and asking customers to disclose valuables would violate banking confidentiality norms.

Since… pic.twitter.com/ctoJKjs0xK
— Nirmala Sitharaman Office (@nsitharamanoffc) March 30, 2026

According to the minister, since item-wise valuation or insurance is not feasible under the current framework, a uniform compensation structure has been adopted. She added that any move towards differential compensation would require disclosure of locker contents which is not part of the present system.

The minister’s response reiterates the framework laid down under the Reserve Bank of India’s (RBI's) revised safe deposit locker guidelines which came into effect in 2021 and has since been subsumed into updated regulatory instructions. These guidelines specify that a bank’s liability in case of loss of locker contents due to incidents such as fire, theft, burglary, robbery or fraud by its employees is limited to 100 times the annual rent of the locker.

The guidelines were issued following directions from the Supreme Court which had observed deficiencies in the manner in which banks were handling locker operations and customer grievances (Read: Bank Locker Shocker!). The revised framework also introduced measures such as mandatory locker agreements, electronic alerts for locker operations, and standardisation of procedures for allotment and closure of lockers.

In practice, the compensation amount depends on the annual rent charged for the locker. For instance, if the rent is ₹5,000 per year, the maximum compensation payable would be ₹5 lakh.

Bank lockers are widely used by customers to store jewellery, important documents and other valuables. However, banks do not require customers to declare or periodically update the value or nature of the contents stored in lockers and no inventory of locker contents is maintained.

The question of liability for loss of locker contents has been the subject of disputes in several cases, with customers approaching consumer courts seeking higher compensation. The regulatory framework introduced by the central bank sought to bring greater clarity to the responsibilities of banks and customers in such situations.

Comments