RBI introduces Positive Pay System for Cheques

EDITOR 8/8/20: To enhance the safety of cheque payments, RBI has decided to introduce a mechanism of Positive Pay for all cheques of value Rs 50,000 and above. This will cover approximately 20% and 80% of total cheques by volume and value, respectively.

WHAT IS POSITIVE PAY SYSTEM?

Under the Positive Pay system,

An account holder shares the details of issued cheque to bank like Cheque Number, Cheque date,Payee name, Account number, Amount etc Along with an image of the front and reverse side of the cheque, before handing it over to the beneficiary. When the beneficiary submits the cheque for encashment, the cheque details are compared with the details provided to the bank through Positive Pay. If the details match, the cheque is honoured.

REVERSE POSITIVE PAY VS. POSITIVE PAY

This system requires the issuer to monitor its checks on its own, making it the company’s responsibility to alert the bank to decline a check. The bank notifies the company daily about all presented checks and clears the checks approved by the company.

HOW MUCH TRANSACTIONS ARE DONE THROUGH CHEQUE

The Cheque Truncation System (CTS) for clearing cheques is operational pan-India and presently covers 2% and 15% of total retail payments in terms of volume and value respectively. The average value of a cheque cleared in CTS presently is Rs 82,000.

ICICI BANK

ICICI Bank is one bank that has already initiated this mechanism. To safeguard the cheques issued from ICICI Bank Savings account, a new service was introduced on its iMobile application. This service is called Positive Pay and can be accessed 

under the Services>Cheque Book services menu.

ADDITIONAL INFORMATION

To promote innovation in the financial sector, the RBI chief said it the central bank will set up an Innovation Hub in India.

A scheme of retail payments in offline mode using cards and mobile devices, and a system of on online dispute resolution (ODR) mechanism for digital payments will also be introduced.