Following a payment systems malfunction suffered in 2024 resulting into a N14 billion loss, the Nigeria Inter-Bank Settlement System (NIBSS) Plc has approached a Federal High Court in Lagos, seeking an order compelling affected banks to freeze accounts allegedly linked to unauthorised transfers which occurred during the period.

NIBSS explained that a technical glitch which occurred on its platform on September 6, 2024 disrupted its Nigeria Instant Payment (NIP) engine and allegedly enabled unauthorised transfers into customer accounts maintained by the respondent banks, resulting into transfers totalling about N14 billion.

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Also named in the suit as respondents are 19 commercial banks alleged to have been involved in transactions during the systems glitch, including; Access Bank Plc, Ecobank Nigeria Limited, FairMoney Microfinance Bank, First City Monument Bank (FCMB), Fidelity Bank Plc, Globus Bank, Guaranty Trust Bank (GTBank), Kuda Microfinance Bank, Lotus Bank Limited, Moniepoint Microfinance Bank, Parallex Bank, Polaris Bank Limited, Providus Bank Limited, Sterling Bank Limited, TAJ Bank, Titan Trust Bank, United Bank for Africa (UBA) Plc, Wema Bank Plc and Zenith Bank Plc.

NIBSS, the interbank settlement operator, in the court filings, explained that the September 6, 2024 payment system glitch which it experienced, resulted in “an unexpected behaviour within the payment system, allowing certain beneficiaries to receive funds without corresponding debit instructions from originating accounts. In banking operations, this phenomenon is commonly referred to as dry posting,” the company said.

The company said it had earlier notified the affected commercial banks of the development. However, it noted that the banks insisted on the company formally obtaining a court order before implementing restrictions on customers’ accounts.

In the originating motion filed before the court, NIBSS requested orders compelling the 19 listed financial institutions to immediately place Post No Debit (PND) restrictions on accounts suspected to have received funds generated through the disputed transactions.

In addition to freezing the identified accounts, NIBSS is also praying the court to direct the affected seeking banks to place liens on all accounts connected to the Bank Verification Numbers (BVNs) of the alleged beneficiaries, place the BVNs on a watchlist pending recovery efforts, and reverse all funds traced to the affected accounts.

According to an affidavit supporting the application, NIBSS explained that the technical glitch disrupted its Nigeria Instant Payment (NIP) engine and allegedly enabled unauthorised transfers into customer accounts maintained by the respondent banks.

Court filings indicated that the disputed transactions allegedly occurred between September 6 and September 9, 2024, primarily during weekend operations.

NIBSS further stated that investigations traced the funds to 176 accounts spread across the respondent financial institutions.

“The financial exposure of the Applicant from this incident is in the sum of N13, 662,138, 920.00,” the affidavit stated.

The interbank settlement operator told the court that it immediately notified the affected banks upon discovering the irregular transactions and requested that restrictions be placed on the identified accounts.

However, NIBSS claimed that the banks insisted on obtaining a court order before implementing restrictions on customers’ accounts

The organisation argued that failure to urgently freeze the accounts could result in the dissipation of the funds, thereby jeopardising efforts to recover the money allegedly transferred without authorisation.

NIBSS also relied on provisions of the Central Bank of Nigeria’s 2018 Regulation on Instant (Inter-bank) Electronic Funds Transfer Services, particularly Clause 10, which it said empowers financial institutions to cooperate in the recovery of disputed electronic transfer funds.

According to the company, the reliefs sought are necessary to guarantee the full recovery of the funds allegedly credited to the beneficiaries as a result of the system malfunction.

NIBSS urged the court to grant the application in the interest of justice and to prevent further complications in recovering the disputed funds.