ISLAMABAD: The Islamabad High Court (IHC) has ruled that banks cannot block or freeze citizens’ bank accounts without a verified legal basis, marking a significant decision aimed at protecting consumers from arbitrary financial restrictions.
The ruling was issued by Justice Arbab Muhammad Tahir during proceedings in a case involving a private bank that had independently blocked a citizen’s account during an inquiry conducted by the National Cyber Crime Investigation Agency (NCCIA).
The court subsequently released a six-page written judgment outlining its findings and directions.
In this regard, the private bank admitted its mistake in blocking the customer’s account without sufficient legal justification. As a result, the court imposed a penalty of Rs300,000 on the bank, directing it to compensate the account holder for expenses incurred while pursuing legal action.
The court focused on that financial institutions must operate within the framework of the law and cannot restrict customers’ access to their accounts without a verified and lawful reason.
The judgment stated that banks are not authorized to freeze or block accounts merely on their own discretion and must ensure that any such action is supported by a clear legal basis.
In addition to ordering compensation, the court called upon the State Bank of Pakistan (SBP) to take measures to prevent similar incidents in the future.
The judgment urged the central bank to review the matter and consider issuing comprehensive guidelines to all commercial banks regarding the circumstances under which customer accounts may be restricted.
The court further directed that any future guidelines should clearly state that account holders cannot be deprived of access to their bank accounts without proper legal justification.
The objective, according to the ruling, is to safeguard citizens from unnecessary financial hardship and ensure transparency in banking practices.
The judgment also reinforces the principle that administrative or precautionary measures taken by financial institutions must remain consistent with legal requirements and due process, ensuring that citizens’ financial rights are adequately protected.
