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Positive Pay System for Cheques: RBI Mandate from Jan 2021

Current · Source: Reserve Bank of India · RBI/2020-21/41 · issued 25 Sep 2020 · ~2 min read
Quick answerRBI mandates banks to enable Positive Pay for cheques of ₹50,000 and above from January 1, 2021. Issuers must submit key details electronically; banks may make it mandatory for cheques of ₹5,00,000 and above. Non-compliant cheques won't be accepted under CTS dispute resolution.
The rule, in the simplest words
How it plays out — a real example

Ravi, a payments & clearing officer in Indore, gets a call from a customer who wants to issue a ₹2,00,000 cheque. Ravi explains that from January 1, 2021, the customer must send the cheque's date, payee name, and amount via the bank's app or SMS before the cheque is presented. Ravi shows the customer how to do it on the app, ensuring the cheque will be processed smoothly and avoiding any fraud risk.

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

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

❓ Common questions

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.

📜 Read the original circular — full text as issued by RBI
RBI/2020-21/41 DPSS.CO.RPPD.No.309/04.07.005/2020-21 September 25, 2020 The Chairman and Managing Director / Chief Executive Officer All Scheduled Commercial Banks including 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 Madam / Dear Sir, Positive Pay System for Cheque Truncation System Please refer to the Statement on Developmental and Regulatory Policies dated August 6, 2020 wherein Reserve Bank of India (RBI) had announced introduction of Positive Pay System for Cheque Truncation System (CTS). 2. The concept of Positive Pay involves a process of reconfirming key details of large value cheques. Under this process, the issuer of the cheque submits electronically, through channels like SMS, mobile app, internet banking, ATM, etc., certain minimum details of that cheque (like date, name of the beneficiary / payee, amount, etc.) to the drawee bank, details of which are cross checked with the presented cheque by CTS. Any discrepancy is flagged by CTS to the drawee bank and presenting bank, who would take redressal measures. 3. National Payments Corporation of India (NPCI) shall develop the facility of Positive Pay in CTS and make it available to participant banks. Banks, in turn, shall enable it for all account holders issuing cheques for amounts of ₹50,000 and above. While availing of this facility is at the discretion of the account holder, banks may consider making it mandatory in case of cheques for amounts of ₹5,00,000 and above. 4. Only those cheques which are compliant with above instructions will be accepted under dispute resolution mechanism at the CTS grids. Member banks may implement similar arrangements for cheques cleared / collected outside CTS as well. 5. Banks are advised to create adequate awareness among their customers on features of Positive Pay System through SMS alerts, display in branches, ATMs as well as through their web-site and internet banking. 6. Positive Pay System shall be implemented from January 01, 2021. 7. This directive is issued under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007). Yours faithfully (P Vasudevan) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2020-21/41 · issued 25 Sep 2020. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
🏦 Branch Manager
  • Launch customer awareness campaigns via SMS, branch displays, ATMs, website, and internet banking.
💻 IT / Systems
  • Update internal systems to flag discrepancies flagged by CTS and take redressal measures.
📜 Compliance
  • 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.
  • Coordinate with NPCI to integrate Positive Pay into CTS and implement similar arrangements for non-CTS cheques.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (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), your first concrete step on “Positive Pay System for Cheques: RBI Mandate from Jan 2021” is: “Enable Positive Pay facility for all account holders issuing cheques of ₹50,000 and above by January 1, 2021.” (RBI issued this 25 Sep 2020).

  1. Circular: RBI/2020-21/41 -- Positive Pay System for Cheques: RBI Mandate from Jan 2021
  2. Issued: 25 Sep 2020
  3. Action required: Enable Positive Pay facility for all account holders issuing cheques of ₹50,000 and above by January 1, 2021.
  4. Action required: Consider making Positive Pay mandatory for cheques of ₹5,00,000 and above.
  5. Action required: Launch customer awareness campaigns via SMS, branch displays, ATMs, website, and internet banking.
  6. Action required: Coordinate with NPCI to integrate Positive Pay into CTS and implement similar arrangements for non-CTS cheques.
  7. Action required: Update internal systems to flag discrepancies flagged by CTS and take redressal measures.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11969&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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