Regulatory Alerts2010-07-09 | BPS/DIR/GEN/CIR/01/025BGUIDELINES ON NIGERIA DIRECT DEBIT SCHEME
Below is a concise summary of the relevant documents needed for this task. It's important to remember that every country and jurisdiction has different requirements and legal standards, so it's crucial to ensure all the necessary components are included according to your specific location and context. The following details represent an overarching guideline for the requested procedure. 1. **Direct Debit Agreement**: This is a formal agreement between the *Creditor* (the party receiving payment) and the *Payer's Bank* (the financial institution of the person who will be paying). It outlines the terms, conditions, and responsibilities involved in the direct debit process. The agreement should include provisions for debiting the Payer's account when due, as well as details about notifications and cancellations. 2. **Direct Debit Mandate**: This is a written instruction from the *Payer* (the individual who will be making the payment) to their bank authorizing them to make regular payments from their account to the Creditor's account. It should include details such as the frequency of debiting, the amount to be debited, and the purpose for which the money is being paid. 3. **Form Of Indemnity**: This document serves as a guarantee from the *Creditor* to indemnify (compensate) the bank against any losses they may incur due to the direct debit process. It should include provisions that protect the bank from legal action, such as not requiring proof of the Creditor's agreement to any demand for refund, and allowing the bank to accept or reject claims made by the Payer without their approval. 4. **Letter To Payer**: This letter informs the *Payer* about the terms and conditions of the direct debit process, including their rights and protections under the scheme. It should explain how the process works, what they can expect from their bank and the Creditor, and what actions they can take if they believe there has been an error or want to cancel their mandate. In summary, for a direct debit process to be legally binding and effective, all parties involved - the Payer, the Creditor, and the Payer's Bank - need to have clear agreements and mandates in place that outline their respective roles, responsibilities, and rights. By following these guidelines, you can help ensure that the direct debit process runs smoothly and without any legal issues.