SBP directs banks not to block accounts without legal grounds

The directive was issued in compliance with an order of the Islamabad High Court (IHC), where the SBP submitted its implementation report regarding measures taken to regulate the blocking of bank accounts

ISLAMABAD:(UrduPoint/UrduPoint / Pakistan Point News-June 30th, 2026) The State Bank of Pakistan (SBP) has directed all commercial banks not to freeze or block customers' bank accounts without a valid legal basis, prior approval from the competent authority, and proper verification, in a move aimed at protecting account holders from unnecessary restrictions.

The directive was issued in compliance with an order of the Islamabad High Court (IHC), where the SBP submitted its implementation report regarding measures taken to regulate the blocking of bank accounts.

According to the report, the central bank has instructed all banks across the country to ensure that no account is blocked unless there is a lawful reason supported by authorization from the relevant competent authority and due verification of the case.

The matter came before Justice Arbab Muhammad Tahir, who had directed the SBP to establish an internal mechanism and issue comprehensive guidelines to prevent arbitrary actions by financial institutions.

In response, the SBP issued a fresh set of instructions to all banks, emphasizing that account holders should not suffer losses or inconvenience due to unintentional or precautionary restrictions imposed without sufficient legal justification.

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The central bank further advised banks to adopt appropriate internal mechanisms to ensure full compliance with the new directives. Financial institutions have been encouraged to strengthen their internal procedures so that decisions to block accounts are taken only after completing the required legal and administrative checks.

The SBP said the objective of the guidelines is to enhance transparency, protect customers' rights, and ensure that banking operations remain consistent with legal requirements and judicial directions.

The move is expected to provide greater protection to bank account holders by reducing the risk of arbitrary account freezes while ensuring that banks continue to act promptly in cases where restrictions are required under the law. The new directives are also intended to promote greater accountability within the banking sector and improve public confidence in the country's financial system.