ISLAMABAD: Pakistan is set to introduce a major change in the cheque-clearing mechanism as the State Bank of Pakistan (SBP) prepares to launch the Pakistan Express Clearing System (PECS), with its pilot phase scheduled to begin on October 15, 2026.

Under the new system, banks will no longer be required to physically transfer original paper cheques to other banks for clearing. Instead, cheque images and relevant electronic data will be used to process and settle transactions.

The new mechanism is aimed at making cheque clearing faster, more secure and more efficient while reducing reliance on the physical movement of cheques between banks.

Under the new procedure, when a customer deposits a cheque at a bank, the cheque will be scanned and its digital image, along with relevant data, will be sent to the clearing house NIFT. The electronic image and data will then be transmitted to the concerned bank, which will examine the cheque and decide whether to honour or reject the payment.

The original paper cheque will initially remain in the custody of the bank where it was deposited instead of being physically sent to the paying bank. However, where necessary, the concerned bank will be able to request the original cheque under the “Defer for Physical” procedure if it requires further verification or has concerns regarding the authenticity of the cheque or its scanned image.

The new system will also provide two mechanisms for cheque scanning. Banks with the required scanning facilities will scan cheques at their branches and transmit the images electronically through the NIFT system. In branches without scanning facilities, NIFT will receive and scan the cheques before providing their electronic images to the relevant banks.

According to the implementation plan, the initial pilot phase of PECS will run from October 15 to November 15, 2026, and will initially involve selected banks and institutions.

The system will subsequently be expanded in phases from November 16 to December 31, 2026, covering additional institutions and branches.

The State Bank has set April 30, 2027, as the target for full nationwide implementation of the new cheque-clearing system.

The introduction of PECS is expected to reduce the time and operational requirements involved in cheque clearing while improving the security and efficiency of the overall payment process.

The new system does not mean that paper cheques will be discontinued. Customers will continue to issue and deposit physical cheques, but their clearing between banks will primarily be based on digital images and electronically transmitted data.