InvestorQ : What does the “Positive Pay” cheque system by banks mean for customers?
Arti Chavan made post

What does the “Positive Pay” cheque system by banks mean for customers?

Rutuja Nigam answered.
7 months ago

This has been in discussions for a long time, and the RBI is likely to implement “Positive Pay” system from Jan-21. This is likely to make cheques safer and reduce cheque related frauds. Essentially, this system will prevent frauds via alteration in cheques.

What happens in a Positive Pay system is that the account holder shares details of the cheque issued with the bank. The onus from that point is on the bank and they are supposed to clear the cheque only after verifying that the details match with original.

This will largely obviate alteration frauds especially in case of cheques lost in transit or misplaced. These lead to prolonged litigations where it only adds to the burden on the legal system and does not offer an easy resolution.

The Positive Pay system will be voluntary for the customers. However, Banks may make it mandatory for cheques above the value of Rs.5 lakhs. Customers are to be submitted by the customer electronically and IDBI Bank has already implemented this facility. The Pay facility is being developed by NPCIL or the National Payment Corporation of India.