Positive Pay System is a key solution for Banking frauds

Positive Pay System is a key solution for Banking frauds: Says RBI
The Reserve Bank of India declared in August 2020.That it will be going to introduce a new payment system. Which is called as Positive Pay System, in order to Prevent banking frauds, while payments with cheques.

What is Positive Pay mechanism?

According to RBI the concept of Positive Pay System is a re- verification important details of large amount cheques. Through this process the issuing person of cheque gives the required details.

Through Electronically, like ATM, Internet banking, Mobile banking, SMS, etc. How ever the details may be date, name of the payee, beneficiary, amount of cheque, etc. The payee send these details to the drawee bank.

What is positive pay and how does it work?

As soon as, submitting the required details to the drawee bank they will be cross checked. With the help of presented cheque by Cheque Truncation System (CTS). Any variation found by CTS to the drawee bank. How ever the presenting bank, take the necessary steps to resolve the issue.

Also Read : Great relief to SBI customers

In this regard National Payment Corporation of India shall develop the positive pay facility in CTS. But also make it available to participatory banks. On the other hand, Banks make it available to all account holders, while issuing the cheque amount above 50000.
In particular, at the choice of the account holder while using this facility banks may consider mandatory amount ₹500000 and above. In fact, this process will cover nearly 20% of cheque transactions by quantity and 80% by its value.

Implementation

Positive Pay System is a key solution for Banking frauds. As per RBI guidelines, Positive Pay System shall be implemented from January 01,2021. Further, RBI told that from Jan01,2021 onwards only the cheques that are compliant with Positive Pay System instructions will be accepted, Only under the dispute mechanism of CTS grids. How ever, the member banks may implement same arrangements for the cheques out side CTS.

Cheque Truncation

It is an initiate introduced by RBI, not only to faster clearance of cheques but also to eliminate the flow of physical movements of the cheque. Instead of this, in cheque clearing process an electronic image of cheque will be sent along with required details, for further process.