A cheque is still a piece of paper that has to travel. From October 15, the State Bank of Pakistan (SBP) will begin testing a system in which the paper stays put and its image does the moving.

The central bank announced that it will start a pilot of electronic cheque clearing. The new setup is called the Pakistan Express Clearing System (PECS). The SBP expects it to cover the whole country by April 30, 2027.

What PECS Changes

PECS is built on cheque truncation. That means a cheque stops its physical journey at the first bank and is cleared through its digital image from then on.

The concept is defined in the Payment Systems and Electronic Fund Transfers Act, 2007, according to an SBP circular. The central bank says the aim is to strengthen digital payments and make clearing and settlement more efficient.

Under PECS, the presenting or collecting bank captures the cheque image. It sends the image to the clearing house, National Institutional Facilitation Technologies Limited (NIFT). NIFT passes it to the paying or drawing bank, which decides whether to pay or reject the cheque.

The Paper Does Not Disappear

The physical cheque does not vanish. It stays with the presenting institution until the clearing house collects it.

The paying bank can also ask for the original. If it doubts the instrument or the contents of the image, it can mark the cheque “Defer for Physical,” the SBP said.

This safeguard matters. Image-based systems raise a fair question: what if a scan hides something a bank would spot on paper? The SBP has built in a way to fall back on the original.

Two Ways to Capture a Cheque

Cheques can enter the system in two ways.

The main method is branch capture. The presenting bank’s branch scans the cheque with a compliant scanner. This can happen at the branch itself or at a nearby designated branch. The image then goes through the clearing house’s system.

The second method is bureau capture. A branch that cannot use branch capture can fall back on it. In this case, NIFT collects the cheque, scans it and sends the image to the paying bank.

Pilot Timeline

The pilot will run in three phases. The SBP’s announcement detailed the first two.

The SBP has also issued rules, procedures and operational instructions for PECS, along with an implementation plan.

Why Pakistan’s Branch Network Is the Real Test

The most useful detail in the circular is the fallback option. Bureau capture shows the SBP expects some branches to lack scanners or the setup to run branch capture.

Pakistan’s banks operate in big cities and in small towns with limited infrastructure. A system that works well in a Karachi or Lahore main branch must also work in a smaller branch with older equipment. The April 2027 deadline puts that burden on every participating institution.

Businesses are the other group to watch. Traders and companies that deal in cheques will care about one question: will clearing get faster? The SBP says it wants more efficient clearing and settlement. It has not published a target for clearing time, and that is the figure customers will look for.

PECS is a back-end change that most customers will not see at first. They will still write and deposit cheques as before. The change happens after the cheque reaches the branch.

That makes the pilot’s quality control the story to follow. The readiness report NIFT submits after Phase 1 will show whether the system holds up under real volume. If the SBP publishes even a summary of it, the public and the banking sector will have something concrete to judge.

A deadline of April 2027 is realistic only if the pilot finds its problems early. The test is not whether the system works in a few well-equipped branches. It is whether it works in the weakest branch of every participating bank.