The RBI (Reserve Bank of India) decided to introduce the ‘positive pay system’ for cheque a couple of months ago. Under the new rule re-confirmation of key details may be needed for payments beyond ₹50,000. This new cheque payment rule will come into effect from 1 January 2021. The announcement by RBI Governor Shaktikanta Das in August MPC came in order to keep consumer safety in focus and to lower the cases of fraud and abuse with respect to cheque payment.
What is a positive pay system?
Positive Pay is essentially an automated fraud detection tool. It matches specific information related to the cheque presented for clearings, such as the cheque number, cheque date, payee name, account number, amount, and other details against a list of cheques previously authorized and issued by the issuer.
Here are 5 things to know about the new rule for cheque payments:
1) The concept of Positive Pay involves a process of reconfirming key details of large value cheques.
2) 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 (like date, name of the beneficiary/payee, amount, etc.) to the drawee bank, details of which are cross-checked with the presented cheque by CTS. Any discrepancy is flagged by CTS to the drawee bank and presenting bank, who would take redressal measures.
3) 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.
4) 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.
5) Only those cheques which are compliant with the above instructions will be accepted under the 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 web-site and internet banking.