Emphasized that financial institutions cannot deny citizens access to their funds without legal authority
ISLAMABAD:
In a landmark judgment aimed at protecting bank customers, the Islamabad High Court (IHC) has asked 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 freezing of his bank account by a private bank during an investigation by the National Cyber Crime Investigation Agency (NCCIA).
According to the six-page written judgement, the court imposed a fine of Rs.300,000 on the private bank after it admitted blocking the customer’s account without due justification. It also ordered the bank to pay the legal costs incurred by the account holder in legal proceedings against the unlawful restriction.
The court ruled 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 law and cannot deny citizens access to their funds without legal authority.
In its judgement, the court also directed the State Bank of Pakistan (SBP) to take measures to prevent citizens from being adversely affected by unjustified account freezes in the future.
The court directed the central bank to review the matter at hand 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 said.
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 to do so.
