CBN directs banks to demand indemnity for online transfers above N1m

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

According to the apex bank, the directive is applicable on transfers amounting to N1 million for individual customers and N10 million for corporate customers.

The CBN, however, set a maximum limit on the transferable amount at N25 million for individual customers, and N250 million for corporate customers.

Indemnity means security or protection against financial liability. It is a contract that holds a business or company harmless for any burden, loss, or damage.

In this case, the indemnity implies that the bank is not to be held responsible for any liability that may arise from online funds transfer.

In the document titled, ‘Circular on the Review of Operations of the NIBSS Instant Payments System and other Electronic Payment Options with Similar Features’, the apex bank said the indemnity can be paper or electronic depending on the customer’s choice.

“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),” the circular reads.

“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 for highly secured online funds transfer.

“Inform and educate customers on the use of indemnity to increase transaction limits where possible.”