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“POSITIVE TO PAY” TO CHECK CHEQUES FROM JANUARY 2021 BY THE RBI

“POSITIVE TO PAY” TO CHECK CHEQUES FROM JANUARY 2021 BY THE RBI

Context

In order to check banking fraud, the Reserve Bank of India will introduce a “Positive Pay System”.  It is already in use in India and the ICICI bank has been following this procedure since 2016.

Details

  • Under this system, it becomes mandatory to reconfirm key details of cheques that need payments beyond Rs 50,000.
  • The issuer of the cheque will have to submit details of the cheque such as the name of the beneficiary, date, amount of the drawee bank through SMS, internet banking, mobile app or ATM as well.
  • These details will be verified before the cheque is presented for payment.
  • In the case of disparities during the Cheque Truncation System, redressal measures are to be undertaken.

National Payments Corporation of India

  • It will develop the facility of positive pay in CTS and make it available to participant banks.
  • But, this is applicable only to those account holders issuing cheques for amounts greater than Rs 50,000.

Cheque Truncation System

  • It is an image-based clearing system launched in 2010.
  • It is based on cheque truncation which is clearance of cheques through digital means.
  • It involves data matching and verification.

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