SBP tells banks not to block accounts without legal authority, IHC told

The Islamabad High Court was informed on Tuesday that the State Bank of Pakistan has directed all banks not to block customers’ accounts without lawful authority, approval from the competent authority and proper verification.

A compliance report was submitted before a single-member bench of Justice Arbab Muhammad Tahir, stating that banks across the country had been instructed to ensure that no account is blocked unless supported by a lawful reason and proper authorisation.

The report was submitted after Justice Arbab, in the previous hearing, directed the SBP to develop an internal mechanism and issue comprehensive guidelines to prevent arbitrary action by financial institutions.

In response, the SBP issued fresh instructions to all banks, directing them to ensure that account holders do not suffer losses or inconvenience due to unintentional, precautionary or arbitrary restrictions imposed without sufficient legal justification.

The central bank told banks that restrictions on any account may only be imposed after fulfilment of legal requirements and approval from the competent authority.