Does carrying a chain lock around on the frame reduce a bicycle's performance? I have a Montra rock 650B MTB. I use 2 lock systems - 1 cable and 1 chain lock for added security. Both are attached to the frame while I cycle. The chain-lock is pretty heavy (around 700 grams).

I was wondering if the mass of the locks attached to the frame affects the bicycle's performance. If so, is carrying the locks in a backpack instead a better solution?
Yes your bike will be heavier but it the only performance reduction putting it into your back pack wont change it. Personally I carry mine in a back pack but it is because I cant find a place in my bike where to carry it and bike it self feel more heavy. I can feel how it affects the balance setting it higher and making the bike unstable. 

So as a personal chose I prefer to carry by bike lock in a backpack. If you feel ok carrying them on your bike go on. You only problem will be the added weight.