The Islamabad High Court (IHC) has ruled that banks cannot block or freeze citizens’ bank accounts without a verified legal justification, emphasizing the protection of account holders’ rights and due process.
The ruling was issued by Justice Arbab Muhammad Tahir in a case involving a private bank that blocked a citizen’s account during an inquiry conducted by the National Cyber Crime Investigation Agency (NCCIA). The court released a six-page written judgment outlining the responsibilities of financial institutions when dealing with customer accounts.
According to the judgment, the bank admitted that it had mistakenly blocked the account without sufficient legal grounds. As a result, the court imposed a penalty of Rs300,000 on the bank and ordered it to compensate the account holder for legal expenses incurred while pursuing the case.
The court observed that financial institutions must not restrict access to bank accounts unless there is a clear and lawful basis supported by relevant legal procedures. It stressed that arbitrary account freezes can cause significant hardship to citizens and undermine public confidence in the banking system.
The judgment also directed the State Bank of Pakistan to review the matter and consider issuing comprehensive guidelines for all banks operating in the country. The proposed guidelines should ensure that customers are not prevented from accessing or using their accounts without proper legal authorization.
The court further instructed the central bank to develop precautionary measures that clearly define the circumstances under which an account may be blocked or frozen. Such measures, it said, would help prevent future misuse of banking powers and provide greater protection for consumers.
Legal experts have described the ruling as an important decision reinforcing the principles of transparency, accountability and due process within Pakistan’s banking sector. The judgment is expected to influence future banking practices regarding customer account restrictions and regulatory compliance.