TAJ Bank Ltd has suffered another major system failure, resulting in the unauthorized transfer of nearly N957.4 million to customer accounts across 26 commercial banks and fintech platforms, a development that echoes a similar incident last year.
However, in a surprising legal twist, the bank has withdrawn its lawsuit against the affected institutions after the Federal High Court in Abuja declined its request for interim freezing and reversal orders.
This latest glitch occurred in March 2025, marking the second time in under a year that TAJ Bank’s internal systems were compromised. In 2024, a separate system error saw N139.6 million wrongly credited to multiple accounts—a matter which at the time received a favorable interim ruling from Justice Peter Lifu of the Federal High Court, who ordered the reversal of funds from institutions like FairMoney Microfinance Bank.
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Court Declines Freeze Request, Bank Backs Down
In court filings dated June 11, 2025 (Suit No: FHC/ABJ/CS/1132/2025), TAJ Bank had argued that the affected financial institutions were obligated under the CBN Regulatory Framework for Banking Verification (BVN) Operations and Watchlist for the Nigerian Banking Industry (2017) to freeze the disputed funds and reverse them to TAJ Bank.
The bank claimed that unless its applications for post-no-debit orders, freezing directives, and fund reversals were granted, it would face “untold hardship and dire financial loss.” According to the suit, the N957.4 million was traced directly to customers’ accounts with the 26 institutions following a “system glitch in the Plaintiff’s server” on March 9 and 10, 2025.
However, during a session on June 27, Justice Muhammad Umar rejected the motion for an ex-parte freezing order, stating that the financial institutions must first be put on notice and properly served with TAJ Bank’s legal documents.
TAJ’s lawyer, Rilwanu Idris, argued passionately for the order, saying, “The money had already been deducted… and if you ask them to produce this money, they will,” warning the court that the funds might otherwise disappear. The court disagreed, instead scheduling the case for a full hearing on July 21, 2025.
But at the resumed hearing, TAJ Bank abruptly backed down. Represented by T.O. Nworie, the bank filed a Notice of Discontinuance dated July 17, 2025, withdrawing its request for fund recovery and abandoning the case without explanation.
Justice Umar accepted the withdrawal and struck out the matter.
Previous Incident and Legal Precedent
TAJ Bank’s 2024 case had ended quite differently. That earlier incident involved a Federal High Court order instructing fintechs to freeze and return N139.6 million mistakenly sent to multiple customers due to a similar system error. Then, the court approved the motion, provided that the bank would indemnify affected institutions in case facts later contradicted the basis of the reversal.
In contrast, the 2025 ruling signaled a shift, with the court choosing not to issue any interim relief unless all parties were heard, reflecting a more cautious stance amid the rising number of digital transaction disputes.
Rising Threat of Digital Banking Frauds
The TAJ Bank saga underscores the growing fragility of digital financial infrastructure in Nigeria’s banking sector. According to data from the Nigeria Interbank Settlement System (NIBSS) cited by Nairametrics, Nigerian banks lost a staggering N52.26 billion to fraud across 70,000+ transactions in 2024—a fivefold jump from N11.61 billion in 2023.
The spike is attributed largely to vulnerabilities in electronic payment channels, where fraudsters often use social engineering tactics, including phishing, fake websites, and malware. Insiders also reportedly enable some of the institutional-level fraud.
Dr Tope Fasoranti, a banking expert and consultant on digital transformation, noted that collusion, weak cybersecurity protocols, and reactive response systems have worsened the threat. “Banks need stronger frameworks, deeper inter-institutional collaboration, and proactive risk-monitoring to curb this trend,” he said.
The Challenge This Exposes
TAJ Bank’s quiet withdrawal raises serious questions about enforcement capacity, responsibility sharing, and legal remedies in Nigeria’s financial ecosystem, especially when glitches result in large-scale unauthorized debits.
The incident also puts pressure on regulators and stakeholders to tighten banking system protocols, ensure traceability of electronic funds, and review legal processes that govern digital fraud disputes.
While the CBN’s existing regulatory framework empowers banks to flag and block suspicious accounts, enforcement remains murky in practice, especially when courts demand due process over urgent intervention.