KARACHI: The State Bank of Pakistan will introduce the Pakistan Express Clearing System (PECS) from October 15, under which cheques will be cleared on the basis of electronic images rather than the physical movement of instruments between banks.
According to a circular issued by the central bank’s Digital Innovation and Settlements Department on October 5, the new system is based on the concept of cheque truncation as defined in Section 2(zl) of the Payment Systems and Electronic Fund Transfers Act, 2007. Images of cheques will be captured by the presenting or collecting bank and transmitted to the clearing house, National Institutional Facilitation Technologies (NIFT), for onward transmission to the paying or drawing bank for processing.
Implementation will begin on a pilot basis with limited participating institutions from October 15 to November 15. The clearing house and participating banks will then review the outcomes and address any issues, after which NIFT will submit a consolidated readiness report to the State Bank. From November 16 to December 31 the system will be extended to the remaining participating institutions, which will progressively roll out truncation capability across their branch networks. Nationwide coverage is targeted by April 30, 2027.
Under PECS the physical cheque will remain with the presenting bank until collected by the clearing house. However, if the paying bank has doubts about the authenticity of the instrument or the quality of the image, it may mark the item “Defer for Physical” and request the original cheque.
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Cheques may be scanned either at the branch where they are deposited (Branch-Capture) or, where a branch lacks scanning facilities, collected and scanned by NIFT (Bureau-Capture). During the pilot period from October 15 to December 31 an additional PECS clearing cycle will operate daily, with NIFT required to submit the cycle to the State Bank by 3pm.
The State Bank has directed all NIFT member financial institutions to train relevant staff on the truncation process, ensure compliance with applicable laws including the Payment Systems and Electronic Fund Transfers Act 2007 and the Negotiable Instruments Act 1881, and create public awareness through print, electronic and social media.
The initiative aims to strengthen Pakistan’s digital payments ecosystem and improve the efficiency and security of cheque clearing and settlement.
