The State Bank of Pakistan (SBP) has issued new instructions directing all banks to stop blocking, freezing, or restricting customer bank accounts without proper legal authority. The move is aimed at protecting account holders’ rights and ensuring that banks follow due legal process before taking action against any customer.
The directive comes after concerns raised by the Islamabad High Court (IHC) over the practice of freezing bank accounts without sufficient legal justification. During court proceedings, Justice Arbab Muhammad Tahir instructed the central bank to develop a clear framework to prevent arbitrary restrictions on customer accounts.
Under the new guidelines, banks can only freeze an account, limit withdrawals, or impose operational restrictions if they have clear legal authority and comply with all applicable laws and regulatory requirements. The SBP emphasized that no action should be taken without proper approval and thorough verification.
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The central bank also noted that some financial institutions had previously placed precautionary restrictions on customer accounts without completing adequate verification. Such actions caused unnecessary inconvenience and financial hardship for account holders.
To address these issues, the SBP has made it mandatory for banks to conduct comprehensive due diligence before restricting any account. Financial institutions must verify all relevant information and ensure that every decision is backed by legal provisions.
In addition, banks have been instructed to strengthen their internal policies, compliance procedures, and monitoring systems to ensure the new rules are implemented effectively. The SBP believes these measures will reduce wrongful account freezes and improve transparency across Pakistan’s banking sector.
The latest directive is expected to increase customer confidence in the country’s financial system by ensuring that account holders are protected from arbitrary actions. Banking experts say the new framework reinforces the importance of accountability and legal compliance while balancing the need to prevent financial crimes.
The State Bank of Pakistan has advised all banks to immediately align their procedures with the updated guidelines. Customers can expect greater protection of their banking rights, while financial institutions will be required to justify any future account restrictions under the law, helping build a more transparent and trustworthy banking environment in Pakistan.
