Positive Pay System

From January 01 2021, the Reserve Bank of India will roll out the Positive Pay System for large amount (above INR 50,000) cheque transactions. Flagged by concerns in rising frauds by and tampering of cheque leaves or sheet, the RBI has come up with the Positive Pay System for Cheque Truncation System. The National Payments Corporation of India will be developing the new security system.

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Positive Pay System

An enhanced safety measure to prevent frauds, this system will reconfirm key details of issued cheques. Under this system, the account holder who issues a cheque to someone, will electronically via SMS, mobile app, internet banking or ATM pass on relevant details of the cheque such as, date, name of beneficiary, payee, amount, etc to the drawee bank. In turn, using the Cheque Truncation System (CTS), the drawee bank will verify the details as provided by the issuer before processing the payment against the cheque. CTS will alert the drawee bank if it finds any discrepancy, who will take necessary actions.

Cheque Truncation System

Earlier, cheque leaves had low security features which became restricted prevention of cheque frauds. The Cheque Truncation System (CTS) for clearing cheques is now functional pan-India. The implementation of Positive Pay system will further enhance customer safety standards and reduce cases of cheque leave tampering and fraud.

However, RBI has made it optional for the banks to make the system mandatory or leave it to the account holder’s preference to choose Positive Pay mechanism.

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