Iran’s banking sector has entered a serious crisis after two of the country’s largest state-owned banks froze customer accounts and disabled cash withdrawals across the nation. The sudden disruption has left millions of citizens unable to access their money and has created widespread concern among the public. The two banks at the center of the crisis are Bank Melli and Bank Sepah, both of which play a major role in managing financial services for individuals, businesses, and government institutions across the country.
The shutdown began after a major strike hit a critical Bank Sepah data center in Tehran. This facility handled important banking operations, including systems responsible for processing salary payments for military personnel and members of the Islamic Revolutionary Guard Corps. Once the strike damaged the infrastructure, key financial systems stopped functioning. As a result, banks across the country were forced to freeze accounts and temporarily stop withdrawals while authorities attempted to deal with the technical damage.
Strike on Banking Infrastructure Causes Nationwide Disruptions
The attack on the Bank Sepah data center in Tehran triggered widespread problems across Iran’s financial network. Data centers are essential for modern banking because they process payments, store account information, and allow money transfers between banks. When such a facility is damaged, many banking operations cannot function normally. In this case, the strike disrupted the digital infrastructure responsible for verifying balances and processing transactions across several systems.
Crypto exchange Binance sues Wall Street Journal after report on alleged Iran-linked transactions
The damaged facility was particularly important because it supported the network that processes payments for military and security institutions, including the Islamic Revolutionary Guard Corps. After the systems went offline, ATM services began failing and digital payment networks experienced widespread outages. Customers attempting to withdraw money or use banking apps quickly discovered that transactions could not be processed.
During the early hours of the disruption, the Central Bank of Iran attempted to calm public concerns. Officials initially dismissed the reports and described the banking interruptions as routine maintenance while also calling some of the claims unreliable. However, as the disruptions continued and more customers reported problems accessing their funds, the central bank later acknowledged that parts of the banking system had become inoperable due to the damage.
With the systems unable to fully verify balances or process transfers, banks including Bank Melli and Bank Sepah made the decision to lock customer accounts and disable withdrawals across the country.
Citizens Face ATM Shortages and Payment Failures
The banking freeze quickly caused panic among citizens. Long lines formed outside ATM machines in Tehran and other major cities as people rushed to withdraw cash before the situation worsened. Many residents waited for long periods only to find that the machines were displaying “temporarily out of service” messages. At the same time, online banking services and payment systems linked to the affected banks also stopped functioning, making it difficult for people to access their funds digitally.
Switzerland adopts sweeping new sanctions against Iran targeting individuals and companies
Families who depend on daily banking access suddenly faced major difficulties paying for food, transportation, and other basic needs. Small businesses were also affected because card payment systems stopped working in several places. Without reliable digital transactions or access to cash, normal economic activity slowed in many areas.
The crisis has been especially difficult for retired military personnel and government workers who receive their salaries through Bank Sepah and Bank Melli. Since the damaged infrastructure handled many of these payments, thousands of individuals are now waiting for funds that have not yet arrived.
Analysts suggest that the account freeze may also be a preventive step to avoid a nationwide bank run. When large numbers of customers attempt to withdraw money at the same time, banks may quickly run out of available cash. By restricting withdrawals, authorities may be attempting to maintain liquidity while efforts are made to restore the damaged systems.
The situation is further complicated by the continued decline of the national currency, the rial. As the conflict enters its third week, the disruption of financial infrastructure has added to economic pressure inside the country. With digital payments failing and cash becoming scarce, some areas have begun shifting toward barter exchanges, where goods are traded directly instead of using money. At the same time, the inability to process salary payments for security forces and members of the Islamic Revolutionary Guard Corps has increased pressure on the country’s financial stability.