Explained: What are the new safety features in cheques above Rs 50,000?
Banks will enable a new system for all account holders issuing cheques for amounts of Rs 50,000 and above. What is the Positive Pay System for cheque transactions? Written by George Mathew , Edited by Explained Desk
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The concept of Positive Pay involves a process of reconfirming key details of large-value cheques.
On January 1, 2021, the Reserve Bank of India (RBI) will introduce the ‘Positive Pay System’ for cheque transactions above Rs 50,000 in a bid to enhance safety and eliminate frauds.
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Updated Dec 17, 2020 | 06:26 IST
The Cheque Truncation System (CTS) for clearing cheques is operational pan-India and presently covers 2 per cent and 15 per cent of total retail payments in terms of volume and value respectively New rules will apply to clear high value cheques via Positive Pay from Jan 1. Know details here | Photo Credit: BCCL
New Delhi: The Reserve Bank of India (RBI) has decided to introduce a new rule for cheque payments from January 1, 2021. It is called a positive pay system for cheques, under which re-confirmation of key details may be needed for payments beyond Rs 50,000. Availing of this facility would be at the discretion of the account holder. However, banks may consider making it mandatory in case of cheques for amounts of Rs 5 lakh and above.
How Positive Pay system safeguards cheque payments
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Banking regulator Reserve Bank of India (RBI) has decided to ring in the New Year with additional protection for your high-value cheques. From January 1, 2021, a new concept of Positive Pay System for Cheque Truncation System (CTS) will be introduced, seeking to further augment customer safety in cheque payments.
So how does Positive Pay work?
Well, the concept of Positive Pay involves a process of reconfirming key details of large-value cheques. Under this process, the issuer of the cheque submits electronically, through channels like SMS, mobile app, Internet banking and ATM, certain minimum details of that cheque (like date, name of the beneficiary/payee, and amount) to the drawee bank, the details of which are cross-checked with the presented cheque by CTS. This will have to be done before handing over the cheque to the beneficiary.
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