Stressed that financial institutions cannot deny citizens access to their funds without legal authorization
ISLAMABAD:
In an important ruling aimed at protecting bank customers, the Islamabad High Court (IHC) has ordered banks not to block or freeze citizens’ bank accounts without a verified legal basis.
Justice Arbab Muhammad Tahir issued the order after hearing a case in which a citizen challenged the unilateral blocking of his bank account by a private bank during an investigation by the National Cybercrime Investigation Agency (NCCIA).
According to the six-page written judgment, the court imposed a fine of Rs300,000 on the private bank after it admitted to blocking the customer’s account without proper justification. It also ordered the bank to pay the legal costs incurred by the account holder in taking legal action against the illegal restriction.
The court ruled that banks cannot block or freeze their customers’ accounts without a verified legal reason. He stressed that financial institutions must act strictly within the limits of the law and cannot deny citizens access to their funds without legal authorization.
In its judgment, the court also directed the State Bank of Pakistan (SBP) to take measures to prevent citizens from being harmed by unjustified account blocks in the future.
The court asked the central bank to re-examine the present case and consider issuing comprehensive guidelines to all banks operating in the country.
These guidelines should clearly define the circumstances under which an account can be restricted and ensure that customers are not deprived of access to their accounts without legal justification, it says.
The court ordered that all precautionary guidelines issued by the SBP explicitly state that individuals cannot be prevented from using their bank accounts unless there is a valid and legally supported reason to do so.
