Israeli Courts Approve Massive 15 Billion Shekel Class Action Against Major Banks

The Central District Court has authorized a class-action lawsuit against four of Israel's largest banks following allegations that they failed to pay interest to customers on funds held in current accounts between 2022 and 2025. Judge Shmuel Bornstein ruled that there is a reasonable possibility that the lawsuit, based on claims of unjust enrichment, will be accepted.

Class Action Targets Major Banks

According to reports, the legal proceedings were initiated against Bank Leumi, Mizrahi Tefahot, Israel Discount Bank, and First International Bank. Plaintiffs argue that the financial institutions benefited from using approximately 400 billion shekels of public funds left in current accounts without paying any return to depositors.

"The banks enjoyed the use of public funds without offering appropriate remuneration or informing clients of daily interest-bearing alternatives."

Massive Financial Claims

Applicants claim that the banks should have provided reasonable interest on credit balances or at least notified customers about options to transfer funds into daily interest-bearing investment vehicles. Supported by an economic expert opinion, the estimated damages for the relevant period exceed 15 billion shekels. In May 2025, an amendment to the Banking Law came into effect, obligating banks to notify customers holding positive balances exceeding 15,000 shekels for a consecutive quarter about alternative investment options.

Bank Responses and Next Steps

• Banks' Defense: Financial institutions rejected the claims, arguing there is no legal obligation to pay interest on current account balances.

• Bank of Israel Stance: The central bank opposed mandatory interest payments, citing potential negative impacts on market competition.

While the court's approval does not constitute a final ruling on liability, it allows the class-action lawsuit to proceed to the substantive stage where compensation will be discussed.