SBP to roll out image-based cheque clearing from October 15

Pakistan will introduce an image-based cheque clearing system from October 15 as part of efforts to strengthen digital payments and improve the efficiency of cheque processing and settlements, the State Bank of Pakistan (SBP) said.

The Pakistan Express Clearing System (PECS) will replace the physical movement of cheques with an image-based process, allowing banks to exchange cheque images electronically through the National Institutional Facilitation Technologies (NIFT), the clearinghouse.

Under the system, the presenting or collecting bank will capture cheque images and transmit them to NIFT, which will forward them to the paying bank for processing. The mechanism, known as cheque truncation, is provided for under the Payment Systems and Electronic Fund Transfers Act, 2007.

The implementation will begin with a limited pilot involving selected financial institutions designated by the central bank in consultation with the clearinghouse. Nationwide implementation is scheduled to be completed by April 30, 2027.

Phased implementation

The first phase, from October 15 to November 15, will involve selected participating institutions. NIFT and the participating banks will review the pilot's results, resolve operational issues and submit a consolidated readiness report to the central bank.

In the second phase, from November 16 to December 31, the system will be extended to all participating institutions, incorporating lessons from the initial pilot. Banks will progressively expand cheque-truncation capabilities across their branch networks.

The final phase will require all participating institutions to establish the necessary infrastructure and achieve nationwide coverage by April 30, 2027.

The central bank has directed financial institutions to nominate focal persons for implementation and regularly report progress. Banks must also maintain prescribed clearing timelines, customer service standards and settlement obligations throughout the transition without disrupting services.

Public awareness and compliance

Financial institutions have been instructed to raise public awareness of the new system through print, electronic and social media and to provide relevant staff with training on the cheque-truncation process.

Banks will be required to comply with applicable laws and regulations, including the Payment Systems and Electronic Fund Transfers Act, 2007, and the Negotiable Instruments Act, 1881.

During the pilot period, from October 15 to December 31, NIFT will operate an additional daily cheque-clearing cycle and submit it to the central bank by 3 p.m., according to the implementation plan.