What changed
RBI introduced Positive Pay System for Cheque Truncation System, requiring issuers of large-value cheques to electronically confirm details like date, payee, and amount to the drawee bank. Banks must enable this facility for all account holders issuing cheques of ₹50,000 and above, and may mandate it for cheques of ₹5,00,000 and above. The system will be implemented from January 1, 2021, with NPCI developing the facility.
What it means for you
Banks must integrate Positive Pay into their systems and educate customers, as cheques not compliant will be excluded from CTS dispute resolution. This reduces cheque fraud risk for high-value transactions but requires operational changes and customer awareness campaigns. Banks should also consider extending similar arrangements for cheques cleared outside CTS.
What you must do
- Enable Positive Pay facility for all account holders issuing cheques of ₹50,000 and above by January 1, 2021.
- Consider making Positive Pay mandatory for cheques of ₹5,00,000 and above.
- Launch customer awareness campaigns via SMS, branch displays, ATMs, website, and internet banking.
- Coordinate with NPCI to integrate Positive Pay into CTS and implement similar arrangements for non-CTS cheques.
- Update internal systems to flag discrepancies flagged by CTS and take redressal measures.
Who it affects
All Scheduled Commercial Banks, Regional Rural Banks, Urban Co-operative Banks, State Co-operative Banks, District Central Co-operative Banks, Local Area Banks, Payment Banks, Small Finance Banks, National Payments Corporation of India
What is the Positive Pay System for cheques?
It's a process where the cheque issuer electronically submits key details (date, payee, amount) to the drawee bank before the cheque is presented. CTS cross-checks these details with the presented cheque, flagging any discrepancies.
Is Positive Pay mandatory for all cheques?
No, it's optional for account holders for cheques of ₹50,000 and above, but banks may make it mandatory for cheques of ₹5,00,000 and above. Non-compliant cheques won't be accepted under CTS dispute resolution.
When does this take effect?
The Positive Pay System must be implemented from January 1, 2021.