Is Positive Pay just one more move to make cheques safer?
You need to look at Positive Pay as a continuation of the process of making banks and cheques safer. It began with CTS-2010; the cheque truncation service that standardized cheque clearing based on Optical Character Recognition (OCR) technology and made cheques safer. RBI also made SMS / Email alerts mandatory for any debit above a threshold and subsequently passed a rule that any alteration in the cheque, however small, will make the cheque invalid. Positive Pay continues this trend of making cheques safer.
How and when will Positive Pay be implemented?
Positive Pay will be effective from January 01, 2021. What Positive Pay implies is that the issuer of the cheque communicates the basic details of the cheque issued to the issuing bank including details like the cheque amount, person in whose favour cheque is drawn, cheque date and tops it up with a scanned image of the front and back of the cheque leaf. The bank is not supposed to clear the cheque if there is any discrepancy between the data uploaded and the cheque.
Will the Positive Pay be applicable to all cheques issued?
There will be 3 grades of cheques that will be considered for Positive Pay. In the case of cheques above Rs500,000 it will be mandatory to register and communicate to the bank via Positive Pay. Banks cannot clear such cheques without Positive Pay clearance. In the case of cheques above Rs50,000, Positive Pay will be at the discretion of the customer and the bank will honour the request. In the case of cheques below Rs50,000, Positive Pay is not required as per the RBI guidelines; purely for the sake of simplicity.
How will Positive Pay help me as a banking customer?
Positive Pay adds one more level of safety to the issue and use of cheques. Quite often, cheques are lost in transit and they fall into the wrong hands. Under Positive Pay, once the customer has communicated details to his bank, the onus is on the bank to ensure that the cheque is not cleared even if there is an iota of doubt about the authenticity of the depositor. At times, people open fake accounts in a similar name. In such cases, Positive Pay allows you to also define the recipient bank details to avoid any chance of misuse.
What is the process for registering for Positive Pay is case of cheques issued?
Registration will be online and the instruction will also have to be done online. Currently, some banks like IDBI Bank and ICICI Bank are already offering this Positive Pay facility as part of their mobile app to select customers. Here the customer is required to upload the basic details and scan copy of the cheque into the mobile app to activate Positive Pay.
Can there still be frauds after Positive Pay is introduced?
Any safety system is only meant to reduce the probability of frauds and not to eliminate frauds. That is practically not possible. It has often been observed that unscrupulous elements still find ways and means to beat the system and misuse cheques. You must look at Positive Pay as one more step in the process of making the issue and use of cheques safer and more foolproof.
What does the bank do after I sent a positive pay request to the bank?
Once the Positive Pay request is sent online to the bank, the bank would only clear the cheque if it finds the cheque fully matching with the details uploaded by you online. If there is any discrepancy or if the bank has any reason to doubt the same, it will immediately contact the customer for verification and ratification before clearing the cheque. It is anticipated that this could delay the process of cheque clearance but it will surely make it a lot safer and more reliable.
The system for Positive Pay is being developed by the National Payment Council of India (NPCIL) and given to banks. It is estimated that the Positive Pay rule will cover 20% of cheque volumes and 80% of cheque value of the banking system. For now, banking customers will have to await the detailed guidelines from the RBI.