Israeli Banks Face Multi-Billion Shekel Lawsuit Over Unpaid Interest

The Central District Court in Lod has accepted for review a multi-billion shekel class-action lawsuit against four Israeli banks: Leumi, Mizrahi-Tefahot, Discount, and Bank International. The banks are accused of failing to pay interest to customers on funds held in current accounts while simultaneously using these funds to generate profits.

Judge Shmuel Bornstein ruled that there is a reasonable probability the lawsuit will be successful for the period between 2022 and 2025. The initial filing to have the case considered as a class action was made in June 2023.

A separate, similar claim against Bank Hapoalim is being reviewed by the Tel Aviv District Court, with a decision on its acceptance pending. The plaintiffs argue that banks are obligated to pay customers a reasonable interest rate on positive balances in current accounts, transfer funds to an interest-bearing daily investment instrument, or at least inform customers about the benefits and possibilities of such transfers.

While an amendment to the Banking Law passed in May 2025 requires banks to notify customers if their account balance exceeds 15,000 shekels for a quarter, including information on alternative investment options, the plaintiffs contend this does not address the damages incurred by customers since April 2022, when interest rates began to rise. They estimate these damages to exceed 15 billion shekels.

Judge Bornstein acknowledged that courts generally avoid interfering with bank pricing. However, he emphasized that the issue is not the interest banks charge on loans, but rather the profit they gain beyond what they would have earned by paying customers a fair and reasonable interest rate on current account funds. The judge considers this excess enrichment to be "unjust enrichment," justifying judicial intervention.