Emphasised that financial institutions cannot deny citizens access to their funds without lawful authority
ISLAMABAD:
In a significant ruling aimed at protecting banking customers, the Islamabad High Court (IHC) has directed banks not to block or freeze citizens’ bank accounts without a verified legal basis.
Justice Arbab Muhammad Tahir issued this order after hearing a case where a citizen challenged the unilateral blocking of his bank account by a private bank during an inquiry conducted by the National Cyber Crime 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 blocking the customer’s account without proper justification. It also ordered the bank to pay the litigation expenses incurred by the account holder in pursuing legal action against the unlawful restriction.
The court held that banks cannot block or freeze customers’ accounts in the absence of a verified legal reason. It emphasized that financial institutions must act strictly within the bounds of the law and cannot deny citizens access to their funds without lawful authority.
In its judgment, the court also directed the State Bank of Pakistan (SBP) to take measures to prevent citizens from being adversely affected by unjustified account blockages in the future.
The court instructed the central bank to review 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 may be restricted and ensure that customers are not deprived of access to their accounts without legal justification, it stated.
The court ordered that any precautionary guidelines issued by the SBP should explicitly state that individuals cannot be prevented from using their bank accounts unless there is a valid and legally supported reason for doing so.
