What Is Positive Pay System?

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Positive Pay System

RBI made the clearing system safer than earlier. From 1st of January 2021, the RBI has introduced an electronic verification system called Positive Pay System in that you will have to share the cheque details with your bank before the bank processes it. Bank clears your checks only after you receive your confirmation of the said cheque. 

This additional security feature is added to address the rising incident of cheque fraud that has happened in recent years. 

As RBI RBI reports, the total volume of fraud transactions in India was increased at the level of Rs. 64,681 crores between April and September 2020. So, as old methods for counterfeiting cheques turn elder with each working day. This positive pay system made a milestone on the road to a secure cheque patent system.

How Positive Pay System Works?

Most of the retail customers using NEFT and RTGS for most of the transactions instead of cheque payments but still many of the high-value transactions carried out with the cheque payment system.

In this positive pay system, before you issue a cheque, you have to provide cheque details like the name of the payee, issue date, and amount to your bank, currently you can send mail mentioning these details but soon the will be lots more option available such as through mobile app and internet banking or through ATMs. 

Whenever the cheque is presented to the bank for payment via CTS Clearing, the bank will check the details of the instrument received against the details you send. In case of any mismatch, the bank may inform you and take suitable action.

Important facts to remember

Every bank has taken the necessary steps to comply with these RBI guidelines to prevent cheque frauds. Not all cheques will need to undergo authentication via Positive Pay but only cheques above Rs. 2,00,000/-. As per expert opinion this process for cheques with a value of Rs 50,000 and above. 

Important points to remember:

  1. Details of the cheque need to be submitted at least 24 hours before the cheque is presented for clearing. ​
  2. Details contains
  • Your account number
  • Serial Number
  • Cheque number
  • Date of issue of Cheque
  • Amount on cheque
  • Name of the payee/Beneficiary name. 
  1. Information provided to the bank must be an exact match to the cheque presented.
  2. Once the bank receives your request, an automatic acknowledgment email will be sent to you.
  3. The Bank may accept or reject your Positive Pay request as per the details.​​​
  4. In case of a mismatch, the request may be rejected, and you need to submit a fresh email can be submitted after rechecking the cheque details. 
  5. Emails need to originate only from the registered email ID of the account.

If you planning to take home loan then check out our article on 8 Points must be consider before taking a loan.

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