State Bank to start clearing cheques by image from October 15

The State Bank of Pakistan (SBP) will begin clearing cheques using electronic images instead of paper from October 15, in a pilot that is due to cover the whole country by April 30, 2027.

The new Pakistan Express Clearing System (PECS) is based on “cheque truncation”, a concept defined in the Payment Systems and Electronic Fund Transfers Act, 2007, the central bank said in a circular, Geo News reported.

How it will work

Today, a paper cheque has to physically travel from the bank where it is deposited to the bank that pays it. Under PECS, it stops at the first branch:

• Capture: the bank where the cheque is presented scans it
• Send: the image goes to the clearing house, National Institutional Facilitation Technologies (NIFT)
• Decide: NIFT forwards it to the paying bank, which decides from the image whether to pay or reject it
• Keep: the paper cheque stays with the presenting bank until the clearing house collects it

If the paying bank doubts whether a cheque is genuine, or the image is unclear, it can mark it “Defer for Physical” and ask to see the paper original.

Two ways to scan

• Branch capture (main mode): the branch scans the cheque itself, or at a nearby designated branch, with an approved scanner
• Bureau capture (fallback): if a branch cannot do that, NIFT collects the cheque, scans it and sends the image on

The rollout

The pilot runs in phases:

• October 15 to November 15: a limited number of banks chosen by the SBP and NIFT; results are then reviewed and NIFT submits a readiness report to the central bank
• November 16 to December 31: extended to all remaining banks, which roll out the system across their branches step by step
• By April 30, 2027: every participating bank must have the infrastructure in place nationwide

The SBP has also issued the rules, procedures and operating instructions for the system.

What it means for customers

The central bank says the aim is to strengthen Pakistan’s digital payments system and make clearing and settlement more efficient. Customers will still write and deposit cheques as they do now; the change happens behind the counter, where every step after the first branch will use the electronic image and its clearing data instead of the paper instrument. The SBP has not yet announced new clearing times for customers.

The wider economic picture

The announcement comes as Pakistan and the International Monetary Fund are expected to reach a staff-level agreement this week, according to Geo News. A successful review would open the way to about $1.2 billion under Pakistan’s $7 billion loan programme and its climate facility, Dawn has reported. The two sides are finalising the Memorandum of Economic and Fiscal Policies, and sources told Dawn there were no new demands from the Fund.

Why it matters

Replacing paper with images in cheque clearing is one of the biggest changes to Pakistan’s payment plumbing in years, and every bank must be ready by April 2027. The pilot results in November will show how quickly the change reaches customers. Read our report on the IMF talks.

This article draws on reporting by Geo News, Dawn and a State Bank of Pakistan circular.