The State Bank of India will be rolling out "positive pay system" for cheques from January 1, 2021. With this, reconfirmation of key details will be needed for payments above Rs 50,000. In September this year, the Reserve Bank of India decided to introduce 'positive pay system' for cheques. At that time, the central bank said, "As per RBI guidelines, we are introducing Positive Pay System (PPS) w.e.f. 01/01/2021 to ensure added security where the cheque issuer now needs to provide details such as account number, cheque number, cheque amount, cheque date payee name with respect to the cheque payments".
What is Positive Pay System?
The Reserve Bank of India has ordered banks to start a 'positive pay system' for cheques from January 1, 2021, in order to check banking fraud. Under this system, the customer will have to re-confirm key details for payments beyond Rs 50,000.
The RBI said that 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.
Under the positive pay system, the issuer of the cheque will be required to submit electronically, through SMS, mobile app, internet banking or ATM certain minimum details like date, name of the beneficiary, payee, amount to the drawee bank.
These details will be cross-checked before the cheque is presented for payment. In case any discrepancy is flagged by cheque truncation system (CTS) to the drawee bank and presenting bank, redressal measures would be undertaken, the RBI said.
The National Payments Corporation of India (NPCI) will develop the facility of positive pay in CTS and make it available to participant banks.
The RBI further said only those cheques that are compliant with positive pay system instructions will be accepted under the dispute resolution mechanism at the CTS grids. Banks, however, will be free to implement similar arrangements for cheques cleared and collected outside CTS.