RBI announced ”positive pay” feature to help prevent cheque frauds

RBI Governor has announced ”positive pay” feature to help prevent cheque frauds

What is “positive pay” system?

  • In order to minimize and avoid the enormous amount of fraud that has been happening these days in terms of cheque payment of huge amount, the governor of RBI will be launching “positive pay” practice while the issue of check by the customer.
  • Making this system a part of cheque related transactions and payments have been in action Since 2016, By ICICI Bank, The second largest private sector lender. The bank has been working with such facility for all cheques irrespective of the amount.

What does “positive pay” policy states?

This positive pay system states that:

  • The customer who issues the cheque has to click a picture of the cheque before handing it over to the beneficiary and upload that picture on the bank’s mobile application for record purpose. It will keep the process authentic.
  • “Positive pay” system will be brought into action for cheques of amount 50,000 and above. It will ensure the safety of cheque payment and transactions. This “positive pay” mechanism comes under bi-monthly policy review of the bank as stated by the Governor. He further stated that: The limit of amount Rs 50,000 will cover approximately 20 per cent of transactions by volume and 80 per cent by value.

How does “positive pay” system works?

The operational guidelines of the system are under design by experts and will be released soon but the overall outlook is as follows:

  • By working with this system, the bank already gets to know that the customer has issued a cheque of certain amount, even before the deposition of the cheque into the account of beneficiary. Having this prior information, the Bank executive can cross check with the customer about the details of the cheque issued and on confirmation, process the transfer of funds into another account.

How it will help the bank?

  • By incorporating this system in working of a bank. Any suspect of fraud stops the processing of cheque and it does not gets cleared. Only the authentic payments get to be processed and cleared. This is a step taken in protection of customer’s money ensured by the bank.

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