What is Positive Pay System for Cheques Payments?

The Reserve Bank of India has introduce  a “Positive Pay System”  that will come into effect from January 2021. The system has been launched to make the cheque payment more secure. The system will make mandatory to re-confirm key details of cheques for the payments beyond Rs 50,000.

Key facts

  • As per the new system, the issuer of the cheque will now have to submit details of the cheque including the name of the beneficiary, date, amount of the drawee bank through a
  • Issuer can also submit the details through internet banking, mobile app or ATM.
  • These details will be cross-checked by the banks before the cheque is presented for payment.
  • If there are discrepancies in the Cheque Truncation System, redressal measures would be followed.
  • This mechanism would be applicable only to those account holders who are  issuing cheques for amounts beyond Rs 50,000.

History

The  positive Pay system is not the new phenomenon in India. The ICICI bank has been using this system since 2016.

Who has developed the system?

“Positive Pay” in Cheque Truncation System is being developed by the National Payments Corporation of India.  RBI would also set up an innovation hub to ease the usage of the system. An Online Dispute Mechanism would also be developed. Under the Dispute Resolution Mechanism at Cheque Truncation System (CTS) only those cheques would be accepted that are compliant with the Positive Pay System.

What is Cheque Truncation System (CTS)?

CTS is an image-based clearing system that was launched in 2010. Under this,  Cheques are cleared digitally by matching and verifying the data.