Customers are usually frustrated by the bank
because of unlawful placing of Post No Debit (PND) on customer’s account. Post
No Debit (this is where the customer is blocked from transacting with his/her
account).The law protects the customer by laying down rules for the bank to
follow before placing PND on any customer’s account. However, these rules are
often breached. This short and illuminating article is what you need whenever
your bank attempts to violate your legal rights. It is important to state in
legal parlance that, there is a technical meaning for: Bank, Banker, Customer
and employee (in order to keep it simple, this article will utilize the ordinary
usage of the aforementioned words).
are several reasons why customer’s account may be blocked by the bank. However,
it is good to start by enumerating the duties of the bank to a customer and
DUTIES OF THE BANK TO THE CUSTOMER
1. Duty to maintain secrecy
2. Duty to honor cheques
3. Not to pay without authority
4. Duty to give accurate advice on
5. Duty to exercise due care
DUTIES OF CUSTOMER TO THE BANKER
to carefully draw cheque to avoid fraud
to report forgery/fraudulent transactions
POWERS OF THE BANK TO FREEZE CUSTOMER’S
the bank cannot freeze customer’s account without a court order. However, the
banker is empowered to freeze customer’s account where there is evidence of
fraud via the account. Basically, the
bank can freeze customer’s account for the following reasons;
indebtedness to the bank:
The customer may take loan from the bank but where there is default in
repayment, the bank reserves the power to block the customer from withdrawing.
may occur where there is writing of bad cheque, money laundering, terrorist
financing, illegal activities etc.
levy/student loan: The
government can request a bank to freeze an account where there is unpaid taxes
and student loan.
of court: There are
several reasons why the court may issue an order to freeze customer’s account;
for example, a creditor can seek judgment against the customer. Where the
creditor successfully obtained court order against the customer, the bank is
empowered to freeze the customer’s account. The Central Bank Nigeria’s Governor
can exercise its power under BOFIA and other relevant laws to obtain court
order against customer’s account. The security agencies like EFCC, ICPC,
Police, DSS and other prosecutorial authorities can apply to the court and seek
an order to freeze customer’s account.
The reasons in number 1, 2, and 3 above
afford the bank absolute right to freeze customer’s account without recourse to
court order. Any other reasons apart from the grounds stated in number one to
three above, requires court order. However, in practice, bank resort to
arbitral freezing of customer’s account without following due process of law.
The court has cautioned the bank against the temptation of freezing customer’s
account without receiving court order. In the recent case of Adetokumbo
Adetola v. Access Bank Plc LD/ADR/800/17, the court held the bank
liable and awarded damages in the sum of Twenty Five Million Naira in favour of
the claimant. In that case, at Ikeja High Court per Hon. Justice S. O. Nwaka
stated that, “it is not in the power of
the EFCC to authorize a Post No Debit (PND) on any customer’s account. The EFCC must not usurp the powers of a court
of law. The duty of care owed the claimant by the bank is nothing but
breached…. This is a society whose affairs are supposed to be governed by and
conducted in accordance with the law. The EFCC and the bank taking law into
their hands is nothing but shameful”.
court emphasized that, the bank’s inaction of not demanding for an order of
court or an official letter authorizing it to place PND on the claimant’s
account amounted to negligence.
to say, security agencies, any third party and other authorities cannot direct
the bank to freeze customer’s account without court order.
HOW TO UNFREEZE YOUR BANK ACCOUNT
1. Visit the bank and seek for
explanation. The bank will inform you of the reason why the account was
blocked. If you are not at fault, demand that the PND be lifted.
2. Where there is no fraud, you are not
indebted to the bank, you are not under any tax obligation, the bank should
lift the PND immediately else you can sue for damages.
3. Where there is a court order against
your account, seek legal advice from your lawyer.
the foregoing, it has been established that, the customer’s exclusive right
over his/her bank account is protected by the law. Where the bank violates the
rules, the customer can exercise his/her right in court and claim damages. The
bank must exercise its power of PND with caution in order to avoid unnecessary
law suit which may go beyond monetary claims to destroy hard earned good will.
other articles by the author:
Life after Law School.
Contact the Author:
BERNARD ADAAFU (OBA) ESQ
(LL.B, B.L, ACIArb, MCMC) is an Associate at KANU G. AGABI, SAN (CON) &
ASSOCIATES, Abuja, Nigeria.