SBP issues new guidelines on freezing bank accounts

KARACHI: The State Bank of Pakistan (SBP) has issued new guidelines directing banks not to block or freeze customers’ accounts without a valid legal basis or authorization from a competent authority.

The directive, issued in compliance with an order of the Islamabad High Court (IHC), requires all banks to ensure that account freezing or debit blocks are imposed strictly in accordance with the law.

Under the new guidelines, banks cannot freeze or restrict bank accounts without proper legal authority and due verification. The SBP also instructed financial institutions to ensure that precautionary restrictions do not unnecessarily harm account holders.

The SBP directed all banks to establish appropriate internal mechanisms to ensure compliance with the new instructions and prevent unlawful restrictions on customers’ accounts.

The SBP has submitted a compliance report to the Islamabad High Court following the issuance of the directive.

Earlier, the IHC ruled that banks cannot block or freeze customers’ accounts without a verified legal basis.

Justice Arbab Muhammad Tahir issued the ruling while hearing a petition filed by a citizen whose bank account had been blocked by a private bank during an inquiry conducted by the National Cyber Crime Investigation Agency (NCCIA).

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In its six-page judgment, the court imposed a Rs300,000 fine on the private bank after it admitted freezing the customer’s account without lawful justification. The court also ordered the bank to reimburse the account holder’s litigation expenses.

The judgment emphasized that financial institutions must act strictly within the law and cannot deny customers access to their funds without proper legal authority.

In its judgment, the court also directed the SBP to take measures to prevent citizens from being adversely affected by unjustified account blockages in the future.