In its Statement on Developmental and Regulatory Policies dated August 6, 2020, wherein Reserve Bank of India (RBI) had announced the introduction of the Positive Pay System for Cheque Truncation System (CTS). On September 25, 2020, RBI has issued a circular stating that the Positive Pay System shall be implemented from January 01, 2021, for all cheques of value Rs.50000 (Rupees fifty thousand) and above.
The concept of Positive Pay involves a mechanism of reconfirming key details of large value cheques. Under this mechanism, the account holder shall furnish certain details of cheque through electronic channels like SMS, mobile app, internet banking, ATM, etc., to the drawee bank. The minimum details required include Cheque Number, Date of Cheque, Beneficiary’s/ Payee’s name, Account number, Amount of the cheque, etc. When the cheque is presented for payment in clearing it will be cross-checked by CTS. The cheque so presented will be honoured only when it matches all specific information related to the cheque authorized and issued by the issuer. Any discrepancy is flagged by CTS to the drawee bank and presenting bank, who would take redressal measures.
The National Payments Corporation of India (NPCI) would develop the facility of Positive Pay in CTS and make it available to participant banks. The participant Banks, in turn, enables all their account holders the facility of issuing cheques for amounts of RS.50000 (Rupees Fifty thousand) and above under the system. While availing of this facility is at the discretion of the account holder, banks may consider making it mandatory in case of cheques for amounts of Rs.500000 (Rupees Five lakh) and above, the circular said. “Only those cheques which are compliant with the above instructions will be accepted under dispute resolution mechanism at the CTS grids. Member banks may implement similar arrangements for cheques cleared/collected outside CTS as well”, it said.
As per the notification, the Positive Pay System shall be implemented from January 01, 2021. The system once introduced expected tol cover approximately 20 percent and 80 percent of total cheques by volume and value, respectively.
The Central Bank advised all the banks to create adequate awareness among their customers on features of the Positive Pay System through SMS alerts, display in branches, ATMs as well as through their website and internet banking.