Pay Positive System

BE/RBI/68/2020

• In order to keep a watch on the bank frauds happening and to control it, the Reserve Bank of India (RBI) introduced the “positive pay system” for cheques.
• The new positive pay system insists on a re-confirmation of key details when a bank user needs to make payments of more than Rs 50,000.
• This new rule is slated to come into force from January 1, 2021.
• Further the guidelines add that the facility can be availed on the discretion of the account holder.
• It is to be noted though that the banks may make it mandatory for cheque payments of amounts of Rs 5 lakhs and more.

What is Positive Pay System?

1. The Positive Pay System, which will be applicable from January 1, is a safety protocol and requires reconfirmation of key details for cheques of large values.
2. Under the positive pay system, the bank customer who issues the cheque furnishes certain minimum details of that cheque such as date, amount, and name of the beneficiary or payee, to the drawee bank through internet banking, mobile app, SMS, or ATM.
3. The system allows the cross-checking of these key details when the cheque is presented for payments. The Cheque Truncation System (CTS) flags any discrepancy found to both the drawee and the presenting banks. The banks can therefore address the issue.
4. According to the RBI, the National Payments Corporation of India shall develop the Positive Pay System in the CTS, which is then going to be made available to participant banks. The banks can then enable this system for all the users and account holders making cheques payments of more than Rs. 50,000.
5. The cheques that are found to be compliant with the instructions can then be accepted for dispute resolution mechanism at the CTS Grids.
6. The bank may think of implementing this system to those cheques which are cleared or collected outside the CTS too.