Positive Pay System: Starting today, the Positive Pay System will apply to cheques worth more than Rs 50,000. Positive Pay System was established by the RBI on January 1, 2021. In numerous phases, banks are gradually deploying it.
Positive Pay System: The positive pay system has been introduced regarding the use of cheques as of September 1, 2021, i.e. today. This technique was developed by the Reserve Bank of India to combat check payment fraud. But, what exactly is this system, and how does it function?
Positive Pay System: What Is It?
(A) What was the cheque payment method like before?
The Positive Pay System, which went into effect today, applies to cheques worth more than Rs 50,000. Before comprehending the Positive Pay System, it is necessary to comprehend how the entire cheque payment system operates. Assume I have an SBI account and you have an Axis Bank account. I sent you a check for Rs 1 lakh to cover the cost of some work after it was completed.
This check was given to your bank, Axis Bank. Through CTS, Axis Bank will show this check to my bank, SBI (Check Truncation System). SBI will deposit the cheque’s amount into your Axis Bank account, and you will be paid.
(B) What should I do starting today?
The scope of fraud here is that if I give you a cheque for one lakh and you mix it up and make a check for ten lakhs, it will be tough for me to recover the money. Now, under the new Positive Pay System, when I give somebody a check, I must also give my bank (in this example, SBI) all of the check’s data in addition to providing you the check. The bank will require information such as the check’s date, beneficiary’s name, account number, total amount, and other pertinent details.
When you provide my bank (Axis Bank) my cheque, it will be sent to my bank, SBI, through CTS. SBI will compare the information on this check to the information I provided. If the details match, the check will be cleared; otherwise, it will be refused.
What is the best way to inform the bank about the check?
Now the concern is, how will I alert my banks about any cheques I write? As a result, you can use mobile banking for this. If you don’t have access to mobile banking, you can provide your bank information via the bank’s website or via SMS.
Which banks are eligible to participate?
Let us remind you that the Positive Pay System was adopted by the RBI on January 1, 2021. In numerous phrases, banks are gradually deploying it. Axis Bank has made this method mandatory as of September 1, 2021, i.e. today. However, large banks such as the State Bank of India, Bank of Baroda, HDFC Bank, and ICICI Bank have already adopted it.