The State Bank of Pakistan (SBP) is set to begin the rollout of the Pakistan Express Clearing System (PECS) from October 15, introducing electronic image-based processing for cheque clearing in place of the movement of physical instruments. The central bank has said the system will initially operate on a pilot basis before being expanded across the country, with nationwide implementation scheduled for April 30, 2027. PECS is based on the concept of cheque truncation under the Payment Systems and Electronic Fund Transfers Act, 2007, under which a cheque is processed using its captured electronic image and associated clearing data rather than physically transferring the original instrument between banks. SBP said the new mechanism is intended to improve the efficiency of cheque clearing and settlement while supporting the development of Pakistan’s digital payments ecosystem.
Under PECS, the presenting or collecting bank will capture an image of the cheque and transmit it electronically to the clearing house, National Institutional Facilitation Technologies Limited (NIFT). NIFT will then forward the image and associated information to the paying or drawing bank for processing. This means that after the cheque has been captured, subsequent stages of the clearing process will rely on the electronic image rather than requiring the physical cheque to travel between institutions. The paying bank will assess the electronic image and decide whether to pay or reject the cheque. The physical instrument will remain with the presenting institution until it is collected by the clearing house. If the paying institution has concerns about the authenticity of the cheque or the contents of its electronic image, the instrument can be marked “Defer for Physical,” allowing the physical document to be examined.
The implementation will take place in phases. During the initial pilot from October 15 to November 15, 2026, PECS will operate at selected clearinghouse participating institutions designated by SBP in consultation with NIFT. Following the initial testing period, participating institutions and the clearing house will review the results, address operational issues and submit a consolidated readiness report to the central bank. The second phase will run from November 16 to December 31, during which the system will be extended to the remaining participating institutions. Banks and other participating financial institutions will progressively introduce cheque truncation across their branch networks and develop the infrastructure required for the wider rollout. During the pilot period through December 31, an additional PECS clearing cycle will also operate daily.
Cheque images can be captured through two modes under the new system. The primary method is branch capture, under which the presenting institution scans the cheque at its own branch or at a designated nearby branch using a compliant scanner before transmitting the image through the clearing system. Where branch capture is not available, bureau capture can be used, with NIFT collecting and scanning the cheque before transmitting the resulting image to the paying institution. SBP has also directed participating financial institutions to train relevant staff, create public awareness about PECS and comply with applicable laws and regulations. All participating institutions are required to develop the necessary infrastructure and achieve nationwide implementation by April 30, 2027. The move marks a significant change in Pakistan’s cheque-clearing infrastructure by shifting the process toward electronic image-based settlement while retaining physical instruments where verification is required.
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