“Positive Pay System” will be launched by the Reserve Bank of India in January 2021. The system makes it mandatory to re-confirm key details of cheques that include payments beyond Rs 50,000.
Highlights of RBI Positive Pay System
In order to monitor banking fraud, from 1 January 2021, the Reserve Bank of India agreed to adopt the “positive pay system” for checks, which will include authentication of main information for payment above Rs 50,000. The cheque issuer will have to submit details of the cheque such as the name of the beneficiary, date, amount of the drawee bank, payee electronically through SMS. However, in case of checks for amounts of Rs 5 lakh and above, banks can recommend making them mandatory. These details will be cross-checked before the cheque is allowed for payment. In case any discrepancy is identified by the cheque truncation system (CTS) to the drawee bank and presenting bank, remedial action will be taken, the RBI said. National Payments Corporation of India (NPCI) will develop the facility of Positive Pay in CTS and make it available to participant banks.
This positive pay system is going to be implemented from January 1, 2021. The Reserve Bank of India guided the banks are advised to create awareness among their customers on salient features of the Positive Pay System through SMS alerts, display in branches, ATMs as well as through their website and internet banking. The RBI has also declared that only those cheques that are compliant with the Positive Pay System are accepted under Dispute Resolution Mechanism at CTS grids.
What is Cheque Truncation System ?
Cheque Truncation System (CTS) is a cheque clearing system introduced by the Reserve Bank of India (RBI) for faster clearing of cheques.CTS is based on a cheque truncation or online image-based cheque clearing system where cheque images and magnetic ink character recognition (MICR) data are captured at the collecting bank branch and transmits them electronically.