TAJ Bank Withdraws N957.4 Million Lawsuit After Second Major System Glitch

TAJ Bank Ltd, one of Nigeria’s non-interest banking institutions, recently found itself at the center of yet another significant operational controversy. In March this year, the bank reportedly suffered a system glitch that led to the unauthorized transfer of a staggering ?957.4 million to multiple accounts across 26 banks and fintech platforms. This incident comes less than a year after a similar technical failure in 2024 resulted in the movement of ?139.6 million from the bank’s system—a case that had led to court-ordered account freezes and partial reversals.

While the 2024 glitch saw TAJ Bank secure a favorable interim court ruling, this time the narrative has taken a different turn. Instead of pursuing its demand for the reversal of the ?957 million traced to recipients’ accounts, the bank, in a surprising move, quietly discontinued its legal action against the implicated financial institutions. The decision followed the refusal of the Federal High Court in Abuja to grant an interim freezing order sought by the bank.

In its suit, marked FHC/ABJ/CS/1132/2025 and filed on June 11, 2025, TAJ Bank contended that the funds were unlawfully debited from its system due to a glitch that occurred between March 9 and 10. The transfers, the bank argued, were made to customer accounts belonging to the 26 defendant institutions. The bank’s legal team had leaned heavily on Central Bank of Nigeria guidelines, specifically the 2017 Regulatory Framework for BVN Operations and the Watchlist for the Nigerian Banking Industry, asserting that these financial institutions had both the capacity and duty to trace, block, and reverse the wrongly credited funds.

Appearing before Justice Muhammad Umar on June 27, TAJ Bank’s counsel, Rilwanu Idris, sought urgent intervention. He warned that unless the court allowed the banks to place a post-no-debit instruction on the affected accounts, there was a risk that the funds would be further dissipated and lost permanently. Despite those submissions, the court rejected the bank’s ex parte application, citing the need for due process and directing that the affected institutions be served notice.

When proceedings resumed on July 21, 2025, a different counsel, T.O. Nworie, appeared for TAJ Bank and informed the court that the bank had elected to withdraw the suit. A formal notice of discontinuance dated July 17 had been filed, and the judge subsequently struck out the matter. No explanation for the sudden reversal was provided in open court.

The turn of events has raised questions across the financial industry. Stakeholders are speculating about behind-the-scenes negotiations or a possible internal resolution. Others see the case as a reflection of the growing operational risks associated with the increasing digitization of Nigeria’s banking infrastructure.

Experts believe the matter also underlines the difficulty financial institutions face in recovering funds disbursed due to system errors, especially once those funds reach customers who may not be willing—or even able—to return them. Some industry observers suggest that the banks and fintechs involved may have resisted what they considered an overreach, with the court ultimately unwilling to grant sweeping interim relief without hearing their side.

The saga comes against the backdrop of a sharp rise in digital fraud across the country. According to data from the Nigeria Interbank Settlement System (NIBSS), Nigerian banks lost ?52.26 billion to fraud in 2024 alone, involving more than 70,000 reported transactions—a massive leap from the ?11.61 billion recorded in 2023. Most of these incidents were traced to electronic banking channels, with fraudsters often exploiting system weaknesses or using social engineering tactics to defraud individuals and institutions alike.

Commenting on the development, economist and digital banking consultant Dr. Tope Fasoranti emphasized the need for financial institutions to adopt more robust digital controls and enhance collaborative frameworks with regulators. He noted that a mix of stronger cyber defenses, responsible consumer behavior, and institutional vigilance is essential to preserving confidence in Nigeria’s rapidly evolving banking ecosystem.

While TAJ Bank has not commented publicly on the withdrawn suit, analysts say the bank’s experience is a cautionary tale for the sector. As digital transactions grow in volume and velocity, so do the risks—and with them, the complexities of dispute resolution, accountability, and customer protection. The financial landscape is changing fast, but the core principles of trust, security, and institutional transparency remain more critical than ever.