Positive Pay – One of the regulatory controls to avoid Payments Fraud
Positive Pay – One of the regulatory controls to avoid Payments Fraud.
What is it?
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 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 Cheque Truncation System (CTS). Any error is flagged by CTS to the drawee bank and presenting bank, who would take redressal measures.
Why Positive Pay?
The Reserve Bank of India (RBI) issued guidelines for banks to implement this system from January 1, 2021, to safeguard against cheque fraud.
How it will work out?
RBI has told banks to enable the facility for all account holders issuing cheques for amounts of ₹50,000 and above. It has also been said that while availing of the facility is at the discretion of the account holder, banks may consider making it mandatory in case of cheque values of ₹5 lakhs and above.
Who developed it?
The Positive Pay System, developed by the National Payments Corporation of India, is a process of reconfirming the key details of large-value cheques. The details are cross-checked while issuing the cheque and any discrepancy is flagged.
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