Here’s what you need to know about the new RBI rule for cheque payments

The RBI is introducing ‘Positive Pay’, a method to prevent cheque payment fraud

Here’s what you need to know about the new RBI rule for cheque payments

A new system will be implemented for cheque payments from 1 January 2021. This is being done by the Reserve Bank of India (RBI) to prevent cheque payment fraud. Called ‘Positive Pay’, the system will be applicable for all payments above Rs 50,000. 

This automated facility is being developed by the National Payments Corporation of India (NPCI). It will be made available to participant banks, who in turn can enable it for all account holders.

How will it work?

Under the Positive Pay system, any individual issuing a cheque of value exceeding  Rs 50,000 will have to reconfirm key details electronically to the drawee bank. These include cheque number, payee name, date, amount, account number, etc. The issuer will have to share these details of large-value cheques via SMS, internet banking, ATM, or mobile app. 

The details will then be cross-checked when the cheque is presented for encashment or processing. If there is any discrepancy, the cheque will be immediately flagged by the Cheque Truncation System (CTS) and both the banks – drawee and presenting – alerted so that the issue can be addressed by them.

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Is it compulsory?

As of now, Positive Pay has not been made compulsory by the RBI. The facility can be availed of at the discretion of the account holder or issuer of the cheque. However, banks may make it mandatory for high-amount cheques of Rs 5 lakh and more. It is also a possibility that banks may implement this system for cheques cleared/collected outside the CTS.

It is important to note that only those cheques that comply with the Positive Pay system will be accepted for dispute resolution at the CTS grid. Hence, it is highly recommended that issuers leverage the facility. 

With the due date for implementation approaching fast, the RBI has advised banks to create awareness and educate their customers about the Positive Pay system, and how it can help to restrict fraudulent activity. To this end, they have been asked to send out SMS alerts, put up displays in bank branches, and share relevant information via ATMs, internet banking, and the official banking websites. Here’s how Digital Savings Account can come handy during the pandemic.




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