RBI Positive Pay System

The Reserve Bank of India is to introduce “Positive Pay System” from January 1, 2021 for cheque transactions above Rs 50,000. This is to be done to enhance safety and eliminate frauds.

What is Positive Pay System?

It is a process of reconfirming key details of large-value cheques. The large value cheques are those where the transactions are above 50,000 INR. It basically involves reconfirmation of key details of cheques. It is not mandatory for the banks to implement the system.

Working of the system

The cheque issuer electronically submits certain details of the cheque to the bank via SMS, ATM, mobile app, etc. These are cross checked by the Cheque Truncation System and discrepancies are flagged to the drawee and presenting banks. The facility is to be developed by the National Payments Corporation of India. 

Dispute Redressal Mechanism

Only the cheques that are compliant with the new system are accepted under the Dispute Redressal mechanism. The member banks shall implement similar arrangements for cheques collected outside the Cheque Truncation System as well.

Share of Positive Pay system

The Cheque Truncation System is currently available all over India. It presently covers 2% of the retail payment in terms of volume and 15% of the retail payment in terms of value.

Current Scenario

Currently, the CTS-2010 standard that specifies minimum security features on cheque leaves act as deterrent against cheque frauds. On the other hand, the standardisation of field placements on cheque forms enable straight through processing by use of image character or optical character recognition technology.

Why is the new system needed?

The above technologies that are currently in use are not 100% secure. The Positive Pay System augments customer safety and reduces frauds occurring on account tampering of cheque leaves.

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Comments

  • Satish N G
    Reply

    Good and new improved technique.