An elderly man, accompanied by his grandson, arrived at the bank branch where his account is held to apply for a bank guarantee. The bank denied his request and even canceled the credit card he had due to a lack of sufficient collateral, on the grounds that it was difficult to communicate with him and that he did not seem to understand the significance of the action.
The Court rejected the claim and held that the bank acted reasonably. Israeli law stipulates that when granting credit, the bank must assess the customer's situation in good faith and in the customary manner, while taking reasonable precautions. In the absence of reasonable cause, the bank is obligated to grant the credit. However, the bank may terminate a payment services contract at any time, and even immediately if exceptional circumstances justify this. Here, there was a difficulty in communicating with the account holder; He did not answer the questions asked regarding the nature of the requested action and as well as questions aimed at understanding whether he was familiar with the time and place. Therefore, the bank officials were under the impression that he did not understand the nature of the action being performed on his account and believed that there was a concern that his account would be emptied while being exploited. Hence, the bank acted reasonably in its refusal to grant credit.