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The short answer
A letter of indemnity is your written promise to cover the bank's losses if acting on your request turns out to be wrong, for example if the receiver later proves the money was rightly theirs. Banks use indemnities when they act on a customer's say-so. Before signing, check the amount, what losses are covered, whether the bank may debit your account and whether it lasts indefinitely.
What an indemnity is
An indemnity is a promise to make good someone else's loss. In a wrong-transfer letter, you are usually saying three things: that you made the transfer by mistake, that the funds belong to you, and that if the bank or the receiving bank suffers a loss because it returned the money to you, you will compensate it.
Why would a bank ask? When a recall succeeds, the receiving bank debits its own customer's account on the strength of your claim. If that customer later shows the money was rightly theirs (a genuine payment for goods, say), someone has to put it back. The indemnity makes that someone you.
Indemnities are common in Nigerian banking
Banks use indemnity forms whenever they act on a customer's instruction outside the normal process. FirstBank's FAQ, for example, refers to an Email OTP indemnity form for customers whose SMS codes do not arrive and an online limit increase indemnity form for raising transfer limits. UBA's *919# page lists higher USSD limits for customers who use Secure Pass with an indemnity. A wrong-transfer indemnity follows the same logic: you take on the risk of the exception.
When you may be asked to sign one
- When you ask your bank to recall a transfer and it needs your written confirmation before contacting the receiving bank.
- When the receiver has agreed to return the money and the receiving bank wants protection before debiting.
- When a transfer is returned to you after a long delay and the bank wants your written acceptance.
Some banks use a standard form; others ask for a letter on plain paper with your signature. Ask your bank which it needs.
What to read before you sign
| Clause to look for | Why it matters | What to ask |
|---|---|---|
| The amount | Your liability should be tied to the transfer, not open-ended | Is it limited to the sum recovered? |
| "All losses, costs and expenses" | May include legal costs if the receiver sues | Which costs, and must the bank tell you first? |
| Right to debit your account | Lets the bank take the money back from you without asking | Will I be notified before any debit? |
| Duration | An indemnity with no end date lasts as long as the claim could be made | Can it be limited to a period? |
| Statement of facts | You confirm the transfer was a mistake and the money is yours | Is every fact stated correct? |
| Governing documents | Refers to your account terms | Can I have a copy of what is signed? |
What a short, fair letter usually contains
- Your name, account number and the date.
- The transfer details: amount, date, session ID, receiving bank and account number.
- A plain statement that the transfer was made in error.
- Your request that the bank recover the amount.
- Your promise to repay the bank that amount, and reasonable costs, if the receiver later proves the payment was due to them.
- Your signature, matching the bank's records.
If the bank's form is longer than this, that is not a problem in itself, but each extra clause is worth reading slowly. Ask the bank officer to explain any sentence you do not understand before you sign, and write the date beside your signature.
Is it safe to sign?
If the facts are true, the transfer really was your mistake and the money really was yours, the risk is usually low: the indemnity matters only if your claim turns out to be wrong. The risk rises when the situation is less clear, such as a payment that was part of a disputed deal, or a transfer to someone who claims you owed them. In that case, do not sign a statement that the money "was not due" unless that is true.
Never sign a blank form, never give your PIN or password in the letter, and keep a copy of everything you sign. Remember also that an indemnity does not oblige the receiver to return anything; banks generally need the receiver's consent or a court order to reverse a transfer, as a LawPavilion commentary on erroneous transfers explains.
Worked example
Example only. Ngozi sends ₦300,000 to the wrong account. The receiver agrees to return it and the receiving bank asks her bank for an indemnity. Ngozi's form says she indemnifies the bank "against all claims" with no limit. She asks for the wording to be limited to ₦300,000 plus reasonable costs, and for notice before any debit. The bank accepts a note to that effect. Three days later ₦300,000 is credited back, and she keeps a stamped copy of the letter.
Where Pryme fits
On Pryme, every payment needs your approval with a transaction PIN, and your statement can be generated as a verifiable statement through VerifyDoc.ai to support any letter you sign. See also security, how banks recall a wrong transfer can a bank reverse a transfer without consent and the wrong-transfer scam.
Questions people ask
Why is my bank asking me to sign an indemnity for a wrong transfer?
Because returning the money relies on your claim. The indemnity means you, not the bank, cover any loss if your claim turns out to be wrong.
Can the bank debit my account after I sign an indemnity?
It may, if the letter allows it. Read the clause and ask to be notified before any debit.
Do I need a lawyer to sign a letter of indemnity?
Not usually for a simple mistaken transfer, but it is sensible for large sums or unusual wording.
Does signing an indemnity mean I will get my money back?
No. The receiver must still agree, or a court must order it. The indemnity only protects the banks if they act.
Sources
- FirstBank: FAQs (indemnity forms for email OTP and limit increases) · accessed Oct 2026
- UBA: *919# USSD banking (limits with Secure Pass and indemnity) · accessed Oct 2026
- LawPavilion: Erroneous bank transfers in Nigeria: costly mistakes, fraud risks and legal remedies · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.