What is the Positive Pay System for cheque transactions? | Explained

From January 1, 2021 Indian banks will be introducing the Positive Pay System. In August 2020, RBI had ordered banks to start a positive pay system for cheques above 50,000 rupees from January 1, 2021 with an aim to enhance…

What is the Positive Pay System for cheque transactions? | Explained

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From January 1, 2021 Indian banks will be introducing the Positive Pay System. In August 2020, RBI had ordered banks to start a positive pay system for cheques above 50,000 rupees from January 1, 2021 with an aim to enhance safety and eliminate the possibility of frauds. Under this system, you, the customer will have to re-confirm key details of your cheque for payments beyond Rs. 50,000 which means when you issue a cheque you will have to submit details like date, name of the beneficiary, account number, amount etc., via SMS, mobile app, internet banking or ATM to your bank then these details will be cross checked with the presented cheque by Cheque Truncation System or CTS. If there is any discrepancy then the CTS will flag it off. These details will be cross checked before the cheque is presented for payment. This is not mandatory, the banks will have this system in place and if the account holder wants then he/she can use it. But banks may consider making it mandatory in case of cheques of more than 5 lakhs.

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