Individual bank customers must now provide to their banks indemnity letters for instant transfers above N1 million and transfers above N25 million for corporate customers.
The apex banks also directed to inform and educate their customers on the use of indemnity to increase transaction limits
“A Letter of indemnity shields the one party to a transaction against possible consequences that may arise from the other party’s failure to perform. They are common when a party has a duty to perform construction services or transport property,” explained the Business Professor.
Thus, the indemnity letter provided by bank customers absolves the bank from any loss arising from the transaction.
The CBN order was contained in a circular, signed by Mus Jimoh, Director, Payment System Management Department.
Titled: “Re: Circular on the Review of Operations of the NIBSS Instant Payments and other Electronic Payment Options with Similar Features”, the circular stated : Banks are hereby required to comply with the following:
“Accept indemnity from customers for ‘Highly Secured Online Funds Transfer above N1m for individual and N10m for corporate, subject to a maximum of N25m (Individual) and N250m (Corporate);
“Provide customers with the option of electronic or paper indemnity based on the customer’s preference;
“Implement electronic indemnity with stricter controls requiring biometric verification of identity;
“Adhere to multiple factor authentication (MFA) for ‘Highly Secured Online Funds Transfer;
“Inform and educate customers on the use of indemnity to increase transaction limits where applicable.”