RBI to Implement Positive Pay System from January 1, 2021; Here's How it Will Work
File photo of the Reserve Bank of India logo.
The Reserve Bank of India (RBI) has come up with positive pay system for cheque payments to prevent cases of banking fraud. It will be implemented from January 1, 2021.
The central bank has asked all the banks to spread awareness on the positive pay system among their customers through SMS or putting out information regarding that in branches. They can also make their customers familiar with the positive pay system through their website.
As the new system will be in place within a few months, here is what people should know about it:
Customers will now have to furnish details of cheques like name of the beneficiary, payee, amount to the drawee bank and date through available means, SMS, internet banking or ATM and mobile app. This will be applicable if the amount mentioned on the cheque is above Rs 50,000.
The furnished details will be re-confirmed by the bank for completing the transaction successfully. However, the process will take place with the will of the account holder.
Authorities concerned will swing into action once any discrepancy is flagged by the cheque truncation system (CTS).
Under CTS, flow of the physical cheque does not take place and instead, an electronic image of the cheque is transmitted to the paying branch through the clearing house. During this process, relevant information like data on the MICR band, date of presentation and presenting bank are sent.
The National Payments Corporation of India (NPCI) has been entrusted with the task of developing the facility of positive pay in cheque truncation system. It will also be responsible for making the facility available to participant banks.
The RBI has clarified that only cheques that will be used to make payment in accordance with the positive pay system will be accepted under the dispute resolution mechanism at CTS grids. But, the central bank has allowed commercial banks to put in place similar arrangements for cheques cleared and collected outside CTS.
In future, it may be mandatory to follow positive pay system guidelines for cheques of Rs 5 lakh or above.