In order to check banking fraud, the Reserve Bank of India decided to introduce the 'positive pay system’. Availing of this facility would be at the discretion of the account holder.
What is a positive pay system?
After an account holder issues a cheque to anyone, he will share the cheque details with the bank. Before making payment against the cheque, banks will match the details available on the cheque with those that the issuer has provided. Such checks will ensure banks process genuine cheques only.
Under this process, the issuer of the cheque submits electronically, through channels like SMS, mobile app, internet banking, ATM, etc., certain minimum details of that cheque (like date, name of the beneficiary/payee, amount, etc.) to the drawee bank, details of which are cross-checked with the presented cheque by CTS.
Details:
National Payments Corporation of India (NPCI) is developing the Positive Pay facility and will make it available to banks. According to the RBI’s notification, the issuer of the cheque will submit details electronically, through channels like SMS, mobile app, internet banking, ATM, and so on.
The customer will need to enter details such as the name of the person or the organisation to whom the cheque is issued, the amount, cheque number, and the date of issue.
Once the customer shares the details, the bank’s system will upload the data into the centralized data system of Positive Pay. On receiving the cheque, the bank will verify the details from the central database.
Banks will make the payment if the details which the account holder has provided match those on the cheque. In case of a mismatch, the bank will reject the cheque.
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