Banks cannot freeze accounts without legal approval: SBP

June 30, 2026 (MLN): The State Bank of Pakistan (SBP) has instructed all banks and microfinance banks not to impose debit blocks, operational restrictions, or freeze customer accounts without lawful authority, proper approval, and due verification, in line with directives issued by the Islamabad High Court (IHC).

In an official communication dated June 15, 2026, the central bank directed chief compliance officers of all banks to ensure that any restriction on customer accounts is imposed strictly in accordance with the law and only after obtaining the necessary legal authorization and completing due verification procedures.

The instructions were issued to comply with an Islamabad High Court order dated June 2, 2026, which barred banks from placing debit blocks, operational restraints, or freezing accounts except where permitted under the law.

To strengthen compliance, the SBP has also directed banks to establish robust internal mechanisms to ensure that precautionary or inadvertent restrictions lacking lawful authority do not unfairly prejudice or inconvenience account holders.

The central bank emphasized that any action affecting a citizen's bank account must be supported by legal authority and proper verification before implementation.

Banks have further been instructed to acknowledge receipt of the SBP's directives before the Islamabad High Court and notify the central bank of their compliance via email.

According to the court proceedings, Justice Arbab Muhammad Tahir had restrained banks from blocking customer accounts without legal authority or approval from the competent authority. The court also directed the SBP to formulate an internal compliance framework and issue necessary instructions to banks to ensure adherence to the order.

The SBP has since submitted its compliance report to the Islamabad High Court, confirming that fresh instructions have been issued to banks nationwide to implement the court's directives.

Copyright Mettis Link News