What is Indemnity? CBN orders banks to demand indemnity for online transfers above N1m

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The Central Bank of Nigeria (CBN) has instructed banks and payment service providers (PSPs) to accept indemnity from customers for highly secured online funds transfer.

The bank issued the directive in a circular signed by Musa Jimoh, director of the payments system management department, and posted on its website on Thursday.

 

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The regulation, according to the top bank, applies to transfers of N1 million for individual clients and N10 million for corporate customers.

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The CBN, on the other hand, imposed a restriction of N25 million for individual users and N250 million for corporate clients on the amount that can be transferred.

What is Indemnity?

Indemnity is a legal term that refers to financial responsibility protection. It is a contract that indemnifies a business or firm from any liability, loss, or damage.

The indemnity in this context means that the bank will not be held liable for any liability that may occur as a result of an online money transfer.

Sample of Indemnity form , first Bank Indemnity

Sample of Indemnity form .

According to the apex bank’s ‘Circular on the Review of Operations of the NIBSS Instant Payments System and Other Electronic Payment Options with Similar Features,’ the indemnification can be paper or electronic, according on the customer’s preference.

 

“Banks are hereby required to comply with the following: “Accept indemnity from customers for highly secured online funds transfers above N1 million for individuals and N10 million for corporations, subject to a maximum of N25 million for individuals and N250 million for corporations,” according to the circular.

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“Offer customers the choice of electronic or paper indemnity, depending on their preferences.”

 

“Implement electronic indemnity with tighter controls, such as biometric identification verification.”

 

“Use multi-factor authentication for very secure online money transfers.”

“Inform and educate clients about the usage of indemnity in order to boost transaction limits whenever possible.”

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