The Reserve Bank of India (RBI) on Thursday said it has decided to introduce a mechanism of 'Positive Pay' for all cheques of value Rs 50,000 and above. Under the 'positive pay' system, a customer who issues the cheque clicks a picture of the cheque before handing it over to the beneficiary and uploads the same on the bank's mobile application. "To enhance safety of cheque payments, it has been decided to introduce a mechanism of 'Positive Pay' for all cheques of value Rs 50,000 and above,” RBI Governor Shaktikanta Das said after announcing the bi-monthly policy review.
The limit of Rs 50,000 will cover approximately 20 per cent of transactions by volume and 80 per cent by value, he said, adding operational guidelines in this regard will be issued soon.
Positive pay is a fraud-prevention system offered by most commercial banks to companies to protect them against forged, altered and counterfeit checks.
How will Positive Pay work?
All one needs to do is share the details of issued cheque like Cheque Number, Cheque date, Payee name, Account number, Amount etc along with an image of the front and reverse side of the cheque, before handing it over to the beneficiary.
When the beneficiary submits the cheque for encashment, the cheque details are compared with the details provided to the Bank through Positive Pay. If the details match, the cheque is honoured. In case of mismatch in cheque details, the cheque is referred to you.
Since 2016, the second largest private sector lender ICICI Bank has such a facility for all cheques irrespective of the amount.
By following such a system, a bank knows of a cheque being drawn by the customer even before it is deposited by the beneficiary into her account. Before clearing transfer of funds, the bank's executive can cross-check the details of the cheque which has come for clearance with the one shared by the customer in advance, banking experts said.
With the help of this technique, any cheque where any sort of fraud has happened cannot be cleared at all and hence a depositor's money can be protected, they added.