ISLAMABAD (special crosspondent) – The State Bank of Pakistan (SBP) has issued a stern directive to all banks and microfinance banks nationwide, prohibiting the blocking, freezing, or imposing of operational restrictions on customer accounts without lawful authority, the approval of a competent authority, and thorough due verification. This move aims to protect account holders from undue hardship caused by arbitrary actions.

SBP Circular on Account Restrictions

In a circular disseminated by its Banking Policy and Regulations Department, the central bank emphasized that any measures such as a ‘debit block, account freeze, or operational restriction’ must be implemented strictly in accordance with legal provisions and only after securing the requisite legal authorization. The SBP further urged financial institutions to develop robust internal compliance frameworks. These mechanisms are designed to prevent the inadvertent or precautionary imposition of restrictions on accounts that lack proper legal backing, thereby safeguarding customers from unnecessary financial and operational difficulties.

Islamabad High Court Ruling Compliance

This directive stems directly from an order issued by the Islamabad High Court on June 2, 2026. The court had unequivocally ruled that bank accounts cannot be unilaterally blocked or frozen without adherence to legal procedures and the explicit approval of the relevant competent authority. Justice Arbab Muhammad Tahir, presiding over the case, had specifically instructed the State Bank of Pakistan to establish an internal compliance framework and issue explicit instructions to all banks. The objective was to guarantee that account restrictions are imposed exclusively within the bounds of the law.

SBP Compliance Report Submitted

The State Bank of Pakistan has since submitted a formal compliance report to the Islamabad High Court. This report confirms that the court’s directives have been implemented through the issuance of the new comprehensive guidelines to all financial institutions. The circular, reference number BPRD/LAD/6375/2026, dated June 15, 2026, was addressed to Chief Compliance Officers of all Banks and Microfinance Banks, underscoring the seriousness and urgency of the matter. The Assistant Director of the Banking Regulations & Policy Department, Muhammad Jawwad, conveyed the court order and stressed the need for immediate, lawful action, requesting acknowledgement of the letter to the court and under intimation to the SBP.