The State Bank of Pakistan (SBP) will begin clearing cheques through electronic images instead of physical paper on a pilot basis from October 15, with nationwide coverage due by April 30, 2027.
The Pakistan Express Clearing System (PECS) is based on the cheque truncation concept defined in the Payment Systems and Electronic Fund Transfers Act, 2007, the central bank said in a circular. The system aims to strengthen the digital payments ecosystem and make clearing and settlement more efficient.
Under the system, the presenting or collecting bank will capture the cheque image and send it to the clearing house, National Institutional Facilitation Technologies Limited (NIFT). NIFT will pass it to the paying or drawing bank for processing. The SBP has also issued the rules, procedures, operational instructions and an implementation plan for the rollout.
The pilot will run in phases. From October 15 to November 15, the system will operate at a limited number of participating institutions selected by the SBP in consultation with NIFT. The clearing house and participating institutions will then review the results and address any issues, and the clearing house will submit a consolidated readiness report to the central bank.
From November 16 to December 31, the system will be extended to all remaining participating institutions, which will progressively introduce cheque truncation across their branch networks. All participating institutions must develop the required infrastructure and achieve nationwide implementation by April 30, 2027.
Under PECS, a cheque will be truncated at the presenting institution’s branch, and every later step will use the electronic image and its clearing data. The paying institution will decide whether to pay or reject the cheque based on the image.
The physical cheque will remain with the presenting institution until the clearing house collects it. If the paying institution doubts the authenticity of the instrument or the image contents, it can mark the cheque “Defer for Physical”.
Cheques can be captured in two ways. Under the primary mode, branch capture, the presenting institution’s branch will scan the cheque with a compliant scanner, either on its own premises or at a nearby designated branch, and send the image through the clearing house’s system.
If a branch cannot use this mode, it can use bureau capture, under which NIFT will collect and scan the cheque and transmit the image to the paying institution.
