To enhance the safety of cheque-based transactions, the Reserve Bank of India (RBI) has decided to implement ‘Positive Pay’ system for cheque transactions above Rs 50,000 – a rule that will come to effect from Friday, 1 January 2021.
The Quint breaks down the new rule for you, based on the RBI’s statement.
What is Positive Pay system?
The concept of Positive Pay involves a process of reconfirming key details of large value cheques. Under this process, the issuer of the cheque submits electronically, through channels like SMS, mobile app, internet banking, ATM, etc, certain minimum details of that cheque, such as date, name of the beneficiary, name of the payee, amount, and so on, to the drawee bank. The details of these are cross checked with the presented cheque by Cheque Truncation System (CTS).
Any discrepancy is flagged by CTS to the drawee bank and presenting bank, who would take redressal measures.
Why is this being implemented?
The announcement of the same was made by RBI Governor Shaktikanta Das on 6 August 2020, while addressing the cases of fraud and abuse with respect to cheque payments.
Das said that the system will enhance security and reduce instances of fraud occurring on account of tampering of cheque leaves.
The new system will cover approximately 20 percent and 80 percent of total cheques issued in the country by both volume and value, respectively, reported The Indian Express.
Which cheques will come under this category?
- The National Payments Corporation of India (NPCI) shall develop the facility of Positive Pay in CTS and make it available to participant banks
- Banks, in turn, shall enable it for all account holders issuing cheques for amounts of ₹50,000 and above
- While availing of this facility is at the discretion of the account holder, banks may consider making it mandatory in case of cheques for amounts of ₹5,00,000 and above
What if I have a problem during transaction? How will it be redressed?
- Only those cheques which are compliant with above instructions will be accepted under dispute resolution mechanism at the CTS grids
- Member banks may implement similar arrangements for cheques cleared / collected outside CTS as well
- Banks are advised to create adequate awareness among their customers on features of Positive Pay System through SMS alerts, display in branches, ATMs as well as through their website and internet banking
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