As any resident of Karachi can tell you, the monsoon season in Pakistan’s largest city is no occasion for joy. The city’s crumbling infrastructure, non-existent drainage and faulty electricity lines are a recipe for disaster. Yet even by Karachi’s abysmal standards, the last week of August stands out. The city experienced 484 millimetres (mm) of rain in August, the most in 90 years, with 130 mm recorded on August 27 alone.
For three days, the city came to a standstill. Any low lying area was completely flooded, with car parks and basements particularly vulnerable. And as it turns out, the basements of banks, where lockers are typically kept, were also flooded.
In five separate statements, Profit has learned that customers of Habib Metropolitan Bank (HMB), United Bank Ltd (UBL), and Samba Bank have lost valuable possessions of monetary and sentimental value that were stored in the basement lockers of those banks.
Speaking to Profit under the condition of anonymity, a customer of the Bukhari Commercial branch of HMB in Karachi’s DHA Phase 6 neighbourhood, said that she was informed on August 28 that the branch was flooded, and that staff had been given the day off.
After speaking to her relationship manager and subsequently the branch manager, she learned that the entire basement had been flooded. It was only after the customer proactively made an inquiry did she realise the lockers had been flooded. She said that the bank had taken no initiative on its part to use call centers, SMS, or emails to inform its customers of this development.
“On Tuesday [September 1], my relationship manager informed me that the branch basement was flooded with water till its roof,” she told Profit. “I reside outside Karachi and now am expected to make a dedicated trip to the city to retrieve my valuables because the branch team and the bank lacked the decency to inform its customers ahead of time. This is the only industry with the term ‘relationship manager’ and they have done the precise opposite of managing a relationship.”
Another customer at the HMB Bukhari branch said they got to finally speak to branch staff on Monday, August 31. “They said that the branch might get functional by Thursday [3rd September] but I don’t see that happening. We have a locker on that premises and I know for sure that the basement is already full and water is till the roof. So regarding paper getting mushy or soggy and nothing but waste that would have happened with a lot of people including unfortunately someone like us. Let’s just hope that there is not a lot of loss because there is a lot of damage people have suffered because of ill planning of everyone, including these businesses.”
A customer of the HMB branch at Saba Commercial said that the branch had also been flooded, including the lockers. This particular customer claims to have lost Rs600 million, which they had stored in notes in their locker.
A customer of UBL, who rented a locker at the Clifton branch, told Profit that flood water had seeped into the lockers. Because of the incident, she had lost a key legal document that proved her ownership over assets left to her by her parents, for which a dispute is in court and her possession of the original certificates was her ticket to win the case. She says she was not informed that the items in her locker might have been compromised and had only stumbled upon the information by sheer luck.
Another UBL customer of the Ittehad Commercial branch in Phase 6 told Profit that it was only after her friend, who had experienced the same problem, asked her about her valuables, did it occur to her to check. This customer, who is a filmmaker, told Profit that she lost 20 terabytes of a film she had just completed, adding that her monetary valuables were covered in dirty water. She too was not informed, at any point, that the lockers were flooded and the items therein may have been damaged.
“I was able to recover all the cash which was thankfully in dollars so they didn’t melt away,” she told Profit. “But, I can guarantee that all documents in those lockers have been reduced to mud. I have only ever gone [to that branch] to use the locker which is basically [my husband’s] and [my mother-in-law’s]. I have always had a different person dealing with me, mostly whoever is available.”
Additionally, a customer of Samba Bank who rents a locker in the bank’s Saba Avenue branch, told Profit that his colleague used the bank as a means of escaping heavy rainfall, and when he went to retrieve her later that day, he noticed water up to the roof of the basement where the lockers are kept. He added that he saw that the branch staff was doing everything they could to empty the water, using buckets and pumps. He could not verify whether the lockers were damaged.
He too told Profit, that the bank has not proactively reached out to him through email, phone, or SMS to inform him of the locker flooding situation or the status of his items.
There are two questions here: first, which branches were actually flooded, and if they were flooded, did they do an adequate job of informing their customers? On the first matter, banks have little control, but on the second matter, banks are responsible.
First, let’s look at HMB’s two branches.
Profit spoke to a branch employee of HMB branch at Saba Commercial, who explained on the condition of anonymity that water levels had damaged lockers, and it was unclear if the contents of the lockers had been damaged.
“Customers have not been informed. All customers who managed to wade in have opened lockers to find damaged contents. Any forbidden items in the locker, which could have been placed in a savings account, if damaged – it is not the fault of the bank. We are specific about what can and what cannot be in the lockers, and it is not our fault if customers choose to ignore the specifications.” said this source.
Profit also spoke to the HMB branch manager at Bukhari Commercial, Mahazir Abbas Thawerani, who said that on Tuesday, August 31, the branch staff managed to open the vault door in the basement where lockers are kept. There was around one to two feet of water on the ground which was then pumped out.
According to Mazahir, it is impossible for the branch to ascertain if water has actually seeped into individual lockers, and there is no way of checking if it has, as individuals themselves will have to open their lockers to check their valuables.
Profit also spoke to HMB for an official comment. The bank at large painted a somewhat different picture from the accounts narrated by these two branch employees.
According to Habib Metro, both the branches at Saba Commercial and Bukhari Commercial were impacted by the torrential rains in Karachi. However, the extent to which the two were flooded differs considerably.
The branch at Saba Commercial witnessed waterlogging but not to a great extent. The branch was closed on Friday and Monday, and reopened on Tuesday. According to Habib Metro’s management, they did not send immediate communication to customers because the lockers maintained at the branch were not submerged.
However, the lockers at the Bukhari Commercial branch are located in the basement. This particular branch was significantly waterlogged. Since the branch operations were impacted and the branch was not operational for a few days following the rain spells, its locker holders were not immediately informed of the incident. Since then, however, the bank said it has contacted all locker holders at the branches that witnessed waterlogging, and the customers have been asked to visit and check their lockers.
Habib Metro also said it could not give a figure to the monetary damage inflicted on the Bukhari branch as of now.
“Providing uninterrupted service to our customers, while ensuring their safety, is our top most priority in such circumstances. Following the rains we temporarily closed some branches that experienced waterlogging, till such a point when it was ensured that the branches were safe enough to welcome customers. During this period, we remained accessible to our customers and provided access to their belongings wherever and however possible,” said the Habib Metro management.
Speaking to Profit, Talal Javed, the group head for consumer banking at Samba Bank Pakistan, said that the Saudi multinational banking firm informed its safe deposit boxes customers about the branches where urban flooding has affected the general infrastructure.
“The city of Karachi had been at the receiving end of record breaking – torrential rainfall during the latter half of August 2020,” said Javed. “Despite the disastrous and unprecedented situation, the management of Samba Bank Ltd had made its best effort to ensure that all possible safety precautions were taken to safeguard our clients’ interests. Our branch staff have been in touch with their respective customers for assistance to their day to day banking needs and continued to offer them with uninterrupted services during the tough times.”
Despite repeated requests, UBL did not give a comment to Profit by the time this piece was published.
Could the banks have ‘saved’ the contents of the lockers? No. As a source at the central bank explained to Profit, “the lockers cannot be opened by the bank alone as the lockers have two keys, one with the customer and one with the bank and it requires both keys to be opened. Even in the case of succession after the death of the locker holder, the banks ‘break’ the locker if the key is lost, under instructions of the court and in the presence of a magistrate. If the banks simply ‘opened the locker’ and transferred the stuff it’s clearly the violation and a security breach.”
According to the source, banks could have told customers and got their consent to move lockers.
As for whether the banks will provide compensation – that may be a little tricky. Technically, according to a 2004 circular issued by the SBP’s Banking Policy Department (BPD), banks need to obtain corporate group insurance on various categories and sizes of lockers at competitive rates, which should be properly conveyed to the existing locker holders and new locker holders before they obtain a locker.
“Customers should also be informed about minimum and maximum amount of loss as per terms & conditions of the group insurance policy, which shall be covered under different categories / sizes of lockers,” the SBP clarified.
The SBP also says that in the case of a loss arising due to breakage or damage to the locker, the loss sustained by the locker holder will be made good by the bank immediately, as per the claim within the insurance ceiling of the locker. Thereafter, the bank may claim the amount from the relevant insurer.
“Clauses 2.ii and 2.iv of BPD Circular No. 27 of 2004 dated August 04, 2004 require the banks to obtain corporate insurance for lockers on various categories and sizes of lockers and very importantly to convey that to the customers, and to make good of the losses (if any) to the extent of the insurance cover subject to the terms and conditions of the insurance company,” said Sayyid Mansoob Hasan, chairman at Mansoob & Co., a firm that provides corporate, taxation, and management consulting, and dispute resolution services.
This is a view reiterated in another circular issued by the same department in 2007. “In the case of breakage /damage to the locker by any means, the locker holder shall be compensated by the bank/DFI immediately as per the insurance ceiling of the locker,” the SBP said.
“Clauses 2.iii, 2.iv and 2.v of BPRD Circular No. 05 of 2007 dated June 05, 2007 require the bank to review all insurance contracts, convey the terms and conditions to the customers and to make good of the losses “immediately” as per the ceiling (insurance cover) of the locker,” said Sayyid.
Yet in conversations with bankers, this compensation depends on whether the customer has proper proof of valuables put in the lockers. If the customer has put in currency or bonds, which are typically discouraged by banks, they will not be compensated.
According to a SBP notice for locker holders on HMB’s website, locker holders are advised from keeping any liquid or perishables or contraband items. Additionally, keeping cash is discouraged, as ‘limitations of insurance coverage’ may apply.
And according to some terms and conditions that customers sign, banks are not liable to inform customers about locker damage.
Sayyid told Profit that the customer cannot claim to make good for losses against empty lockers, adding that customers need to demonstrate – to a certain extent – the condition of the items recovered from the lockers. For its part, Habib Metro said that lockers are insured according to their size, and any damage therien is reimbursed accordingly to customers.
“The bank is required to make good of the losses according to the SBP circulars which they can recover from the insurance company,” said Sayyid. “In case of non-compliance by the insurance company the banks have the following platforms to file complaints against the insurance company: 1. Small Dispute Resolution Committee for cases upto Rs. 5,000,000/- per case, Federal Insurance Ombudsman for any amount, and Insurance Tribunal (not advisable as little progress is made there).”
Sayyid insisted that banking customers that are locker holders should ask their respective bank for the insurance contracts against the lockers, file an application for recovery of losses to the extent of the insurance ceiling, and file a complaint to appropriate forums [mentioned above] against the bank in case the bank does not make good on the losses.