Do you transact by Cheque? If so, you should be aware of the Positive Pay System recently introduced by the RBI to prevent Cheque fraud and forgery.
Many people believe that transactions through Cheques are secure, but recently, there has been an increase in forgeries and fake Cheques.
To combat these frauds, the Reserve Bank of India (RBI) has implemented the Positive Pay System (PPS) to enhance the security of Cheque transactions.
The PPS requires the issuer of a significant value Cheque to share key details with the bank before it is presented for payment. These details typically include the Cheque number, date, payee name, bank account number, amount, and other relevant information.
When the beneficiary presents the Cheque for encashment, the bank verifies the details provided by the issuer. If the details match, the Cheque will be processed, but the bank will hold the Cheque for further verification if there is any discrepancy.
Here is a summary of the process:
Cheque Issuance: When issuing a Cheque worth Rs. 50,000 or more, you must voluntarily submit the details to your bank.
Cheque Details: The issuer can inform the bank about the Cheque number, date, amount, payee name, and account number through electronic means such as net banking, mobile app, SMS, or by visiting the bank branch.
Bank Validation: The bank validates these details when the Cheque is presented for payment.
Enhanced Security: Matching details ensure the Cheque clears, while discrepancies result in the bank holding the Cheque, minimizing the chances of cashing fraudulent Cheques.
Advantages of Positive Pay System:
- Prevents fraud: Reduces the risk of forged Cheques by validating Cheque details.
- High Security: Offers extra protection for Cheque payments.
- Faster Clearance: Reduces the likelihood of Cheque returns due to discrepancies.
Key Points to Remember: Cheques above Rs. 50,000 must be reviewed. This policy may be enforced by banks or decided upon by the consumer.
The Positive Pay System must be implemented for Cheques amounting to 5 lakhs and above. Cheque details cannot be changed or deleted after submission.
Payment on a Cheque can be stopped before it is presented. Most banks in India charge a fee for implementing PPS for Cheques over Rs. 50,000.
Customers should contact their respective banks for more details on how to use the Positive Pay System.