The State Bank of Pakistan (SBP) has issued new instructions to banks nationwide, prohibiting them from freezing or restricting bank accounts without valid legal authority and proper authorization. This directive aligns with a recent ruling by the Islamabad High Court (IHC).
Under the SBP’s guidelines, any debit block, operational restriction, or account freeze must strictly comply with legal provisions and be authorized by the appropriate competent authority. The central bank stressed that no action should be taken against a customer’s account unless there is clear legal backing and thorough verification.
Furthermore, the SBP has instructed banks to implement internal controls to ensure full adherence to these instructions. These mechanisms aim to protect account holders from unnecessary financial losses caused by inadvertent or precautionary restrictions imposed without lawful justification.
In a significant development, the central bank highlighted that these internal procedures must prevent customers from being adversely affected by account blocks or freezes carried out without proper legal grounds or approval.
This move follows the Islamabad High Court’s directive, which explicitly barred banks from freezing accounts without legal authority or consent from the relevant competent body. Justice Arbab Muhammad Tahir had ordered the SBP to establish an internal system and issue comprehensive guidelines to commercial banks to guarantee compliance with the court’s ruling.
Notably, the SBP has submitted a compliance report to the Islamabad High Court, outlining the steps taken to implement the court’s instructions effectively.
