Positive Pay System: Here’s What You Need to Know

Bank fraud cases in the country are on a rise and keeping this in mind, the Reserve Bank of India introduced the Positive Pay system. Positive Pay is a tool designed to detect fraudulent activities by matching specific information related to the cheque presented for clearing. Going by RBI’s directive, the State Bank of India has mandatorily implemented the positive pay system from January 1, 2021 for cheque payments exceeding Rs 50,000.

Under this, re-confirmation of some key information will be required. The largest public lender in the country said on its website, “As per RBI guidelines, we are introducing Positive Pay System (PPS) w.e.f.01/01/2021 to ensure added security where the cheque issuer now needs to provide details such as account number, cheque number, cheque amount, cheque date payee name with respect to the cheque payments.”

In August MPC last year, RBI governor Shaktikanta Das had announced the Payment Pay system keeping in mind the safety of customers and to decrease the cases of fraud and crime with regard to cheque payment. RBI had advised all banks to create awareness among its customers about the roll out of the new scheme.

Under the Payment Pay system, the issuer of cheque will have to reconfirm some important information for large value cheques. The issuer will electronically submit the details like the cheque number, cheque date, payee name, account number, amount, and other details against a list of cheques previously authorized and issued by the issuer.

All this information can be updated through SMS, mobile app, internet banking, ATM. The details will be cross checked by the CTS. In case of discrepancies, the CTS will inform the drawee bank and presenting bank for further redressal measures.

Member banks are free to implement similar arrangements for cheques cleared/collected outside CTS. However, it is for the account holder to decide if they wish to avail this facility but banks like the SBI have made it mandatory for cheques above Rs 50,000.

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