Second Major System Glitch Hits TAJ Bank
TAJ Bank Ltd, a prominent non-interest financial institution in Nigeria, recently suffered its second major system glitch within a year—resulting in unauthorized transfers totalling approximately ₦957.4 million to customers’ accounts across 26 different banks and fintech platforms. The incident occurred in March 2025 and mirrors a similar event in 2024, where ₦139.6 million was erroneously disbursed due to technical errors in the bank's server.
While the bank initially sought legal redress and requested a Federal High Court order to freeze and recover the funds, it unexpectedly withdrew the case before it could proceed to full hearing.
Legal Action and Reversal Request
TAJ Bank had filed suit number FHC/ABJ/CS/1132/2025 at the Federal High Court in Abuja on June 11, 2025, seeking to reverse the transfers. The bank argued that under existing Central Bank of Nigeria (CBN) regulatory frameworks—particularly the BVN Operations and Watchlist regulations (2017)—the receiving financial institutions were obligated to freeze and reverse the funds transferred due to the glitch.
The bank's legal representatives emphasized that unless the accounts involved were placed under a post-no-debit restriction, the funds could be permanently lost, potentially resulting in “untold hardship and dire financial loss” for TAJ Bank. The bank further stressed that regulators and stakeholders have a responsibility to act when abuse or fraud is detected in the banking ecosystem.
Court Declines Interim Order
On June 27, 2025, Justice Muhammad Umar presided over a hearing for an interim motion ex parte brought by TAJ Bank’s counsel, Rilwanu Idris. The motion sought to immediately freeze the accounts where the funds had been traced.
Idris maintained that the banks and fintechs were holding funds debited as a result of the glitch, and that a swift order was necessary to prevent the dissipation of the monies. He argued that all the respondents were registered financial institutions and would be capable of complying with a reversal order.
However, Justice Umar refused the ex parte request, ruling that the 26 financial institutions must be properly notified and served before any freezing directive could be considered. The matter was adjourned to July 21, 2025, for further hearing.
Surprise Withdrawal of Case
At the resumed hearing on July 21, 2025, TAJ Bank, through a new legal representative, T.O. Nworie, informed the court of its decision to discontinue the case entirely. A formal Notice of Discontinuance, filed on July 17, was acknowledged and adopted by the court. No official reason was given for the bank’s withdrawal.
Justice Umar subsequently struck out the suit, effectively ending the bank’s legal attempt to reclaim the ₦957 million via court-mandated reversals.
The 2024 Precedent
This incident marks the second time TAJ Bank has faced major losses due to systemic failures. In August 2024, the bank secured an interim freezing order against multiple accounts at FairMoney Microfinance Bank and other institutions. That case, presided over by Justice Peter Lifu, involved a lesser amount of ₦139.63 million and was prompted by a similar technical error.
At the time, the court granted TAJ Bank's request on the condition that the bank would indemnify the fintech platforms in case the interim order was later found to be unjustified.
Broader Industry Implications
The recurrence of these high-value technical mishaps underscores the rising risks facing Nigeria’s digital banking sector. According to data from the Nigeria Interbank Settlement System (NIBSS), Nigerian banks lost ₦52.26 billion to fraud across more than 70,000 reported cases in 2024 alone—more than four times the losses recorded in 2023.
Experts say that these losses are often fueled by system vulnerabilities, insider collusion, and social engineering attacks that trick customers into revealing sensitive credentials.
Expert Advice and Risk Mitigation
Commenting on the incident, Dr. Tope Fasoranti, a digital transformation consultant and banker, advised Nigerian financial institutions to strengthen internal controls and collaborate more closely with regulators and payment system operators.
“Safer banking habits and more robust institutional safeguards are key to minimizing the fallout from incidents like these,” Fasoranti noted. “As digital platforms grow, the industry must evolve to close security gaps while still delivering seamless financial services.”
Conclusion
TAJ Bank’s decision to discontinue legal proceedings, despite the substantial sum involved, leaves several unanswered questions. Whether the bank recovered part of the funds through private negotiation, or is exploring other remedial steps, remains unclear. What is evident, however, is the urgent need for enhanced digital resilience and rapid-response mechanisms within Nigeria’s fast-growing financial ecosystem.