Big decision by RBI for cheque payments over Rs.50k! - The 'Positive Pay System' for Cheques

Big decision by RBI for cheque payments over Rs.50k! Bank account holders must know about this new positive pay system.

In order to check banking fraud, the Reserve Bank of India has decided to introduce from January 1st, 2021, the 'positive pay system' for cheques, under which re-confirmation of key details may be needed for payments beyond Rs.50,000. Availing of this facility would be at the discretion of the account holder. However, banks may consider making it mandatory in case of cheques for amounts of R.5 Lakh & above.

What is positive pay system? How it works?

1. Under the positive pay system, the issuer of the cheque will be required to submit electronically, through SMS, mobile app, internet banking or ATM certain minimum details of that cheque like date, name of the beneficiary, payee, amount to the drawee bank. 
2. These details will be cross-checked before the cheque is presented for payment.  
3. In case any discrepancy is flagged by cheque truncation system (CTS) to the drawee bank & presenting bank, redressal measures would be undertaken.
4. The National Payments Corporation of India (NPCI) will develop the facility of positive pay in CTS & make it available to participant banks.
5. Banks, in turn, shall enable it for all account holders issuing cheques for amounts of Rs.50,000 & above.
6. 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 Rs.5,00,000 & above
7. The positive pay system will be implemented from January 1st.
8. RBI says the "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 & internet banking".
9. Further, RBI says only those cheques that are compliant with positive pay system instructions will be accepted under the dispute resolution mechanism at the CTS grids.
10. Banks, however, will be free to implement similar arrangements for cheques cleared & collected outside CTS