The Central Bank of Nigeria (CBN) has mandated commercial banks and payment service providers (PSPs) to get indemnities from depositors for highly secured electronic funds transfer of N1 million and above for individual customers and N10 million for corporate clients.
However, the apex bank placed an upper limit on the transferable amount at N25 million and N250 million for individual and corporate customers respectively.
Indemnity is a contract that protects a business or company from harm, burden, loss, or damage; and in this case, the indemnity insulates banks from any liability arising from online funds transfer.
Such liabilities for any infringements or risk arising from such transfers are now on the customers.
The apex bank disclosed this in a circular titled: “Review of operations of the Nigerian Interbank Settlement System, NIBSS, Instant Payments System and other electronic payment options with similar features”, and signed by Director Payments System Management Department, Musa Jimoh stated.
Jimoh stated that the directive was in furtherance of a 2014 circular on the subject.
It stated: “Further to the Circular on the above subject referenced BPS/DIR/GEN/CIR/01/011 and dated August 13, 2014, banks are hereby required to comply with the following:
“Accept indemnity from customers for ‘Highly Secured Online Funds Transfer above N1 million for individual and N10 million for corporate, subject to a maximum of N25 million (Individual) and N250 million (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.”