What is ​Positive Pay System?

‘Positive Pay’ system is a new ruling  implemented by RBI. It is a measure to protect  cheque-based transactions from fraud. Under this system,  re-confirmation of key details may be needed for cheque-based transactions amounting to more than ₹50,000.

How do I get affected by Positive Pay System?

As the issuer of a cheque, you have to electronically submit details related to the cheque. The details include account number, amount, cheque number, cheque date, payee name, and other details. The issuer can furnish the details via SMS, mobile app, internet banking and ATM, to the drawee bank. The bank will cross-check the details with the presented physical cheque with the Cheque Truncation System (CTS). If the CTS flags any discrepancies, redressal measures will be taken.

Is it applicable to all banks and accounts?

Banks have the option to implement it to all cheque payments that amount up to ₹50,000 across all types of accounts. But the implementation of the Positive Pay System is mandatory for all account holders issuing cheques for amounts of ₹50,000 and above.  Banks can make the facility optional for the account holders to avail, provided the cheque amount is less than ₹5,00,000. . 

Many banks have made it compulsory for lower amounts. For example, Indian Bank and Bank of Baroda have made it compulsory for the account holder to comply with the Positive Pay measure for cheques of amounts equal to and above ₹2,00,000.

It is important to note that only cheques compliant with the Positive Pay System will be accepted under the dispute resolution mechanism with the CTS.

The Positive Pay system is an additional layer of security for monetary transactions. It is a way to prevent fraudulent cheque transactions. Banks that have the technology can implement it efficiently and provide multiple ways for customers to share information. But other banks need to invest in adequate technology to make it easy for cheque issuers to share information seamlessly. If that is not done, it will be cumbersome for account holders to issue a cheque. On the other hand, this might push people towards digital banking. We will have to wait and see how account holders view this change.