KARACHI: The State Bank of Pakistan (SBP) has introduced the Pakistan Express Clearing System (PECS), a modern cheque-clearing mechanism that will replace the exchange of physical cheques with image-based processing, significantly streamlining the clearing process.
In order to strengthen digital payments ecosystem of Pakistan and enhance the efficiency of the existing cheque clearing and settlements mechanism, SBP has decided to introduce PECS phase-wise.
The implementation of PECS will start from October 15, 2026, initially on pilot basis, and will be completed by April 30, 2027 with nationwide coverage.
READ ALSO: SBP notifies NIFT as designated payment system operator
The new system will be based on the concept of cheque truncation as defined in Section 2(zl) of the Payment Systems and Electronic Fund Transfers (PS&EFT) Act 2007, under which cheques will be cleared on the basis of images captured, instead of physical instruments.
As per PECS, images will be captured by the presenting or collecting bank and will be transmitted to Clearing House -National Institutional Facilitation Technologies Limited (NIFT) for onward transmission to Paying/Drawing bank for processing the cheque/instrument. NIFT, licensed and nominated by SBP, was incorporated in September 1995, as a joint venture between consortium of six major Pakistani banks and Entrepreneurs from the private sector.
As per implementation plan for PECS, under the initial limited-scope phase, scheduled from October 15 to November 15, 2026, PECS will initially be implemented at selected Clearinghouse Participating Institutions(CPIs) designated by SBP in consultation with the Clearinghouse.
Subsequently, the clearinghouse and the Participating Institutions will jointly review the outcomes of the pilot phase and address any related issues. Further, the Clearinghouse will submit a consolidated readiness report to SBP.
Under the limited-scope phase, scheduled from November 16 to December 31, 2026, the PECS will be extended to the remaining CPIs, incorporating lessons learned during the initial pilot phase. All participating institutions will operate PECS in accordance with the prescribed rules and gradually expand cheque truncation capabilities across their branch networks.
Under the complete rollout phase, all Clearinghouse Participating Institutions will be required to develop the necessary infrastructure in line with clearinghouse requirements and achieve nationwide implementation of the Pakistan Express Clearing System (PECS) by April 30, 2027.
As per SBP directives, each Participating Institution shall nominate a focal person for PECS implementation and shall report implementation progress to SBP. Participating Institutions shall ensure compliance with the prescribed clearing timelines, customer service standards and settlement obligations throughout the implementation process without disruption.
During the pilot phase, from October 15, 2026 to December 31, 2026, an additional PECS clearing cycle shall be operated daily, which the clearinghouse shall submit to SBP by3:00 pm.
All Financial Institutions (FIs) are required to take adequate measures to create awareness among the public through print, electronic and social media about PECS. Further, the relevant staff shall be trained on the overall process of Truncation.
While operating under this System, FIs shall ensure compliance with all relevant laws and regulations issued from time to time, including but not limited to the Payment Systems and Electronic Fund Transfers Act, 2007 and the Negotiable Instruments Act, 1881.
These rules will be applied on PKR-denominated cheques and functionally equivalent clearing instruments, including payment orders and banker’s cheques, presented for collection through interbank clearing. All scheduled banks, microfinance banks and financial institutions participating in interbank cheque clearing; whether as presenting institution, paying institution or both.
In case the drawer denies having authorized the payment and claims the cheque is fraudulent or materially altered, the paying institution shall request retrieval of the original Instrument and shall pursue recovery in accordance with law.
Where the paying institution has reasonable grounds to conclude that a paid instrument was forged or counterfeit, it shall refer the matter to the presenting institution under the Genuineness Warranty together with the supporting evidence.
The presenting institution shall take up the matter with its customer and shall provide its findings to the Paying bank as to whether the warranty has been breached. Where breach of the Genuineness Warranty is established, the presenting institution shall recover the amount from the beneficiary and reimburse the paying institution.
The decision on such a referral shall be finalized within ten (10) days of the referral by the paying institution.
Copyright Business Recorder, 2026