28 September 2020

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RBI announces implementation of Positive Pay System for Cheque payments


RBI introduces Positive Pay System for Cheque Truncation. The system is to be implemented from January 1, 2021. The concept of Positive Pay involves a process of re-confirming key details of large value cheques. National Payments Corporation of India (NPCI) is to develop the facility of Positive Pay in Cheque Truncation System (CTS) and make it available to participant banks. Banks, in turn, shall enable it for all account holders issuing cheques for amounts of Rs. 50,000 and above. 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.

Under Positive Pay System, the issuer of the cheque submits electronically, through channels like SMS, mobile app, internet banking, ATM, etc., certain minimum details of that cheque 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. 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.

Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point by the presenting bank en-route to the paying bank branch. Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope of loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related problems, thus benefitting the system as a whole. Though availing of the Positive Pay System facility is at the discretion of the account holder, banks may consider making it mandatory in case of cheques for amounts of Rs 5,00,000 and above.

Tags : Positive Pay System Cheque payments Implementation

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