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A few months ago, the Reserve Bank of India (RBI) rolled out a 'positive pay system' that requires re-confirmation of key details when making payments over Rs 50,000 to keep bank frauds in check. This rule change will come from 1 January 2021.
Things to know about positive pay system
- It is a tool designed to detect fraudulent activity. It matches specific information related to the cheque presented for clearing, like the cheque number, cheque date, payee name, account number, amount, and other details against a list of cheques previously authorized and issued by the issuer.
- The issuer of the cheque submits these details electronically through channels like SMS, mobile app, internet banking, ATM, etc., to the drawee bank.
- National Payments Corporation of India (NPCI) shall develop the facility of Positive Pay in CTS and make it available to all participating banks.
- The option to avail this facility is at the discretion of the account holder. However, banks may consider making it mandatory in case of cheques for amounts of Rs 5 lakh and above.
- To be accepted under the dispute resolution mechanism at the CTS grids, these cheques must be compliant with the instructions on positive pay system.
- Member banks are also free to implement similar arrangements for cheques cleared/collected outside CTS as well.
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