Positive Pay System of making payment to high value Cheques in Clearing or The Cheque Truncation System (CTS) – To further augment customer safety in cheque payments and reduce instances of fraud occurring on account of tampering of cheque leaves, it has been decided to introduce a mechanism of Positive Pay for all high value cheques. The limit of high value cheques are varies bank to bank.
CTS-2010 standard specifying minimum-security features on cheque leaves acts as a deterrent against cheque frauds, while standardization of field placements on cheque forms enables straight-through-processing by use of optical / image character recognition technology.
Also Know – How Does Cheque Truncation System Work ?
RBI vide its Circular RBI/2020-21/41 DPSS.CO.RPPD.No.309/04.07.005/2020-21 dated September 25, 2020 announced introduction of Positive Pay System for Cheque Truncation System (CTS).
Under Positive Pay System, cheques will be processed for payment by the drawee bank based on information passed on by its customer at the time of issuance of cheque.
Effective from January 01,2021 cheques of ₹500000 and above will be compulsorily to be under Positive Pay System and cheques less than ₹500000 will be optional on the part of customer.
How Does Positive Pay System Work ?
The concept of Positive Pay involves a process of reconfirming key details of large value cheques. Under this process,
1. The cheque issuer or Bank customer will furnish certain minimum details of the cheque like name of the beneficiary/payee, amount, electronically via channels like SMS, mobile app, internet banking, ATM, to the drawee bank. Details which is needed to be submitted are :
1. Name of Beneficiary/Payee Name 2. Cheque No 3. Account Number 4. Date of Cheque 5. Amount 6. MICR Code
2. Details of this are then cross-checked with the presented cheque by CTS. Discrepancies, if any, are flagged by the CTS to the drawee bank and to presenting bank, who would then take redressal measures.
3. Any discrepancy is flagged by CTS to the drawee bank and presenting bank, for taking redressal measures
4. National Payments Corporation of India (NPCI) shall develop the facility of Positive Pay in CTS. which will be made available to all the banks.
5. All banks will enable the Positive Pay system for all account holders issuing cheques for amounts of Rs 50,000 and above.
6. While the option to avail this facility is at the discretion of the account holder, banks may consider making it mandatory in case of cheques for amounts of Rs 5,00,000 and above.
7. To be accepted under dispute resolution mechanism at the CTS grids, these cheques must be compliant with the instructions discussed above.
8. Member banks are also free to implement similar arrangements for cheques cleared/collected outside CTS as well.
At the absence of mandatory information under Positive Pay System to the Drawee Bank, the cheque may be returned from 01.01.2021.