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Monday, January 18, 2021

Positive Pay System for cheques: Everything you need to know about the new rule for cheque payments

New rules for cheque payment: Under the positive pay system, an issuer a cheque will have to electronically submit certain minimum details of the particular cheque (such as date, name of the beneficiary, payee and amount) to the drawee bank.

By: Express Web Desk | New Delhi | Updated: January 1, 2021 5:32:32 pm
Positive Pay System for cheque paymentThe details provided by the cheque issuer are going to be cross-checked with the presented cheque by Cheque Truncation System (CTS). (Express photo: Debashish Pachal, editing: Gargi Singh)

The ‘Positive Pay System’ for cheques which was introduced by the Reserve Bank of India in September last year comes into effect from today. The new system is going to enhance the safety of cheque-based transactions in the country according to the central bank.

Under the positive pay system, an issuer a cheque will have to electronically submit certain minimum details of the particular cheque (such as date, name of the beneficiary, payee and amount) to the drawee bank. This can be done through various channels – SMS, mobile app, internet banking and ATM.

The details provided are then going to be cross-checked with the presented cheque by Cheque Truncation System (CTS). In case, there is a discrepancy, it will be flagged by the CTS to the drawee bank and presenting bank, who will then take redressal measures.

Will it be done for all cheques?

No. This process would be done on high-value cheques for amounts of Rs 50,000 and above. The Positive Pay System is a measure designed to detect any fraudulent activity related to cheque transactions.

Will it be available for all bank accounts?

Banks shall enable it for all account holders issuing cheques for amounts of Rs 50,000 and above. While availing of this 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.

What happens in case of a dispute?

According to a September circular of the RBI, only those cheques which are compliant with above instructions will be accepted under dispute resolution mechanism at the CTS grids. Member banks may implement similar arrangements for cheques cleared or collected outside CTS as well.

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