State Bank Bars Banks from Freezing Accounts Without Legal Authorization

Islamabad: The State Bank has directed all banks across the country not to freeze, block, or impose operational restrictions on customer accounts without a valid legal basis, approval from a competent authority, and proper verification.

The directive was issued in compliance with a court order and instructs banks to ensure that account holders are not subjected to unnecessary losses due to precautionary or unintended restrictions.

According to the State Bank’s instructions, any debit block, operational restriction, or account freeze must be carried out strictly in accordance with the law. Banks are required to verify the legal authority behind such actions before taking any measures against a customer’s account.

The central bank also advised financial institutions to establish appropriate internal mechanisms to ensure full compliance with the directive and to prevent unauthorized or precautionary restrictions that could unfairly affect account holders.

The move follows an order by the Islamabad High Court, which had restrained banks from blocking accounts without legal authority or approval from the relevant competent authority.

Justice Arbab Muhammad Tahir had directed the State Bank to develop an internal compliance mechanism and issue clear guidelines. The State Bank has since submitted its implementation report to the Islamabad High Court in accordance with the court’s instructions.