The Central Bank of Sudan ordered the Bank of Khartoum to refund money deducted from customer accounts as fees for the Deposit Insurance Fund, giving the country's largest lender 48 hours to reverse the charges after a public backlash, according to local media.

In a directive issued on Wednesday, the Central Bank of Sudan said the deductions made starting January 29 and calculated according to account balances were improperly applied, particularly to savings accounts. Customers had accused the bank of unlawfully taking funds at a time of deep economic strain.

The central bank instructed the Bank of Khartoum to immediately restore all deducted amounts and clarified that insurance premiums for "Saving" and "Saving Plus" accounts must be paid by the bank itself. It emphasized that these accounts cannot be treated as investment accounts under existing regulations.

The regulator also ordered the bank to improve transparency, including full disclosure of the benefits and entitlements attached to each account type, the profits distributed to savings and investment accounts, and the insurance premiums deducted from investment accounts. All terms and conditions must be clearly explained before accounts are opened, the central bank said, and customers must be free to accept or reject them without coercion.

A comprehensive review of the bank's contracts and account-opening forms was also mandated to remove any conflicting or unfair clauses.

The central bank said the Bank of Khartoum had credited profits to savings accounts but then deducted amounts that exceeded those payments. While the bank told regulators the deductions were applied to investment accounts, the central bank emphasized that savings and investment accounts are legally distinct. Under Sudanese banking rules, banks are required to cover Takaful insurance premiums for savings accounts. Takaful is a Sharia-compliant insurance system based on co-operation and mutual protection rather than profit-seeking.

The Deposit Insurance Fund, which guarantees depositor funds in the event of a bank failure, is governed by a 1996 law that requires banks to contribute 0.2 percent of the annual average of their total current and savings deposits. Banks must also deposit 0.2 percent of the annual average of total investment accounts, while holders of investment accounts are responsible for an additional 0.2 percent contribution on their deposits.

The government and the central bank together cover 10 percent of the total required contributions for current, savings and investment accounts, calculated after deducting the mandatory cash reserves held at the central bank.

The order underscores heightened regulatory scrutiny of banks as Sudan's financial system faces pressure from economic instability and declining public trust.

Story compiled with assistance from The Sudan Tribune