Israeli Court Approves Multi-Billion Shekel Class Action Against Banks Over Interest on Checking Accounts

The Central District Court in Lod has approved a class-action lawsuit against four of Israel's five largest banks: Leumi, Mizrahi Tefahot, Discount, and International. The suit alleges that these banks should have paid customers interest on their current account (checking account) balances. The claim, which could reach over 15 billion shekels (approximately $4 billion USD), covers the period from the start of interest rate hikes in 2022 until new legislation in May 2025 mandated banks inform customers about investment alternatives.

A separate class-action request against Bank Hapoalim is proceeding, with an evidence hearing scheduled for January. The approved lawsuit is based on the legal ground of unjust enrichment. Other claims, including breach of good faith and misleading practices, were dismissed by the court. The court authorized pursuing financial compensation solely for the past period, from April 2022 until the Knesset passed legislation on the matter in May 2025.

The plaintiffs are represented by attorneys Yitzhak Aviram and Shahar Ben Meir. The total amount held in current accounts is approximately 400 billion shekels, with household and small business balances totaling around 236 billion shekels as of July. Banks currently pay a negligible interest rate of about 0.1% on these funds, while profiting significantly from them. For every 10,000 shekels held in current accounts during 2025, banks earned about 430 shekels, while account holders received only about 10 shekels.

An economic opinion supporting the lawsuit estimated the damages between 3.62 and 5.06 billion shekels up to June 2023. The judge, Shmuel Bornstein, noted the immense sums involved and stated that banks' profits from these funds, without compensating customers, constitute apparent unlawful enrichment.

The court rejected the banks' defense that account agreements gave them sole discretion over interest payments, ruling that such clauses do not negate the principle of unjust enrichment. The lawsuit's scope was limited to the past because new legislation in May 2025 addresses future customer notification and investment options for balances exceeding 15,000 shekels. The Bank of Israel's Supervisor of Banks had opposed the lawsuit, arguing that regulatory intervention could harm market mechanisms and competition, and that current accounts' immediate availability differs from fixed deposits.