A few months ago, a positive pay system had been introduced by the Reserve Bank of India(RBI). Under this system, in order that transactions greater than Rs. 50000 can be done, one needs to follow rules of cheque payments. The rule will be applicable from January 1, 2021 so that cases of fraud and abuse of cheque payment can be avoided.
Being an automated fraud detection tool, Positive Pay will help match specific cheque information like cheque number, payee name, account number and other details which will be previously authorised and issued by the issuer.
The process requires reconfirming key details of large value cheques. The issuer of the cheque is required to submit to the drawee bank, details of that cheque which are cross checked with the presented cheque by Cheque Truncation System(CTS) via SMS, mobile app, internet banking, ATM etc. the issuer should also make sure that there are no discrepancies else, there will be redressal measures that the CTS will flag off and the bank will take necessary action.
The facility of Positive pay in CTS will be facilitated by National Payments Corporation of India. The banks are then required to enable all account holders who will then be issued cheques that can be used for amounts above Rs. 50,000.
One must also note that the account holder can choose whether or not to avail this facility. Banks have the discretion to make this method mandatory for payments greater than Rs. 5,00,000.
The CTS grids will only accept those cheques which are compliant with the above instructions for dispute resolution mechanism. Those banks who are members of this arrangement may make arrangements for cleared or collected cheques outside CTS as well. They are also advised to alert and make customers aware of the new systems.