ISLAMABAD: The State Bank of Pakistan (SBP) has instructed banks across the country not to freeze or block customer accounts without proper legal authority, approval from a competent authority, and complete verification. The directive follows court orders aimed at protecting account holders from unlawful restrictions.
According to the new guidelines, banks may impose debit blocks, operational restrictions, or account freezes only when the law clearly permits such actions. Moreover, the SBP stressed that banks must establish legal grounds and complete the necessary verification before taking action against any customer’s account.
Banks Asked to Strengthen Compliance
The central bank also allowed banks to develop internal compliance mechanisms to ensure full implementation of the new directives. These systems should prevent unauthorized restrictions and ensure banks follow all legal requirements.
Furthermore, the SBP emphasized that precautionary or unintentional account restrictions should not cause unnecessary hardship or financial losses to customers. The regulator urged banks to improve internal controls to avoid actions taken without lawful authority.
Court Ruling Prompted New Guidelines
The fresh instructions follow a ruling by the Islamabad High Court, which barred banks from freezing customer accounts without legal justification or approval from a competent authority.
Justice Arbab Muhammad Tahir directed the SBP to establish an internal mechanism and issue clear guidelines for banks. In response, the central bank formulated the new framework and submitted its compliance report to the court.
The latest directive aims to strengthen legal safeguards for bank customers. Consequently, banks must now ensure every account restriction complies with the law, undergoes proper verification, and receives authorization from the relevant competent authority before implementation.
