RBI must order safety audit in all banks
In June last year, burglars emptied out the contents of as many as 26 safe deposit lockers at the Punjab National Bank’s Modinagar branch in Ghaziabad district. Barely five months later, in November, robbers broke into 30 vaults at the Navi Mumbai branch of Bank of Baroda. Last week, 26 lockers of Union Bank of India’s Pashupati Nagar branch in Kanpur have been cleaned out, putting a big question mark over the safety of these lockers. The modus operandi here was similar to many others before— the masked men entered the locker room from an adjacent vacant plot, making a hole in the wall.
Such increasing assaults on vaults, once believed to be safe, is completely undermining consumer confidence in the banks’ ability to safeguard their prized possessions. On one hand, those who have lost all their valuables kept in the lockers do not know how their loss will be indemnified. With banks refusing to take responsibility for their negligence, many victims are running from pillar to post seeking accountability from the banks. On the other hand, those who have kept their important papers and expensive jewellery in these lockers are constantly worried about their safety. The Reserve Bank of India’s continued silence is only adding to the worry.
Police investigation into most thefts reveal banks do not bother to plug even basic vulnerabilities in their buildings or weaknesses in their security systems. For example, in many cases, miscreants entered the locker room from an abandoned building or a vacant plot. How can a room in which these lockers are located share a common wall with a neighbour? And how can banks be oblivious of such risks? Simi- larly, most robberies happen during the weekend when the bank is closed or during a national holiday. Why can’t banks have additional patrolling in these days?
The banking regulator has to take urgent steps to restore public confidence. First, the regulator has to direct every bank to have a safety audit, plug all security loopholes and obtain a certificate to that effect.. Those who fail to comply should be penalised.
Second, the regulator has to ensure banks pay for their mistakes and come up with a formula for quickly compensating the victims of locker thefts, without waiting for police to recover stolen goods. In fact earlier, when bank robberies were not so common, public sector banks did compensate consumers voluntarily. In August 2007, for example, the government had told the Lok Sabha that in order to retain the confidence and trust of consumers, both PNB and SBI had settled the claims of their customers to the tune of Rs 63.34 lakh and Rs 46.80 lakh respectively. Both pertained to bank locker thefts in Delhi during 2004. Today, when consumers are increasingly becoming victims of banks’ careless negligence and losing all their valuables, the banking regulator cannot remain a spectator.
The RBI knows only banks cannot escape responsibility for thefts caused on account of their negligence and have to pay for consequential damage. And the list of what constitutes negligence is long and includes — failure to have proper security arrangements in place, not doing due diligence in hiring the staff, failure to safeguard the keys to the strong room and the lockers, not changing the lock and the key when the locker changes hands and not following the regulator’s instructions on ensuring the safety of lockers and securing the bank premises. So why don’t banks just own up their mistake and voluntarily pay up, instead of wasting public money fighting legal battles with consumers?