Come new year, a new system will be in place for cheques under which reconfirmation of key details may be needed for payments beyond Rs 50,000. The 'positive pay system' for cheques was announced by the Reserve Bank of India in September to check banking fraud and is all set for implementation from January 1, 2021.
What's a 'positive pay system'?
The concept of 'positive pay' involves a process of reconfirming key details of large value cheques. 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 Cheque Truncation System (CTS). Any discrepancy is flagged by CTS to the drawee bank and presenting bank, who would take redressal measures.
The cheques that are found to be compliant with the instructions can then be accepted for dispute resolution mechanism at the CTS grids. Member banks may implement similar arrangements for cheques cleared/collected outside CTS as well, the RBI says.
The positive pay system shall be developed by the National Payments Corporation of India (NPCI), which will make it available to participant banks, the apex bank adds.
Are all cheques covered under the new system?
To begin with, banks will enable the new system for all account holders issuing cheques for amounts of Rs 50,000 and above. While availing the 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 and above.
The banks may think of implementing this system to those cheques which are cleared or collected outside the CTS, too.
The RBI, in addition, advised the banks to create awareness among their customers about these new features via SMS alerts, ATMs, and internet banking.