What is Positive Pay System?

The guidelines for the implementation of the Positive Pay System were issued by the RBI for the banks of the country. From 1st January 2021, this system has been implemented to safeguard banks against any cheque frauds.

Overview:

  • The National Payments Corporation of India has developed the Positive Pay System.
  • Through this system the details of high-value cheques are reconfirmed.
  • Through this system, measures are taken to detect any cheque transaction-related fraudulent activities.

How does this system work?

While submitting a high-value cheque, the person also submits certain details regarding the cheque like date, account number, amount, cheque number, beneficiary name, transaction code, and MICR CODE. These details can be submitted via mobile app, SMS, ATM, internet banking, and even by visiting the branch. The details are then cross-checked while the cheque is being issued and any discrepancy noticed is flagged. In case of any noticed discrepancies, the bank notifies the drawer and withholds any payment until a further order is received.

Amount Limit

The RBI has instructed the banks of the country to enable this facility for all account holders that are issuing cheques of amounts of Rs 50,000 and above. The availing of this facility is at the account holder’s discretion but the banks can make it mandatory in the case of cheques that have values of Rs 5,00,000 and above.

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