Understanding Positive Pay System : Cheque transactions are very common in India. Cheques are the most popular instrument for doing day to day transactions.
But Cheque forgery is one of the most common and serious types of fraud.
To safeguard the customers and combat the growing cheque fraud, The Reserve Bank of India (RBI) has introduced the centralised Positive Pay System for Cheque truncation system (CTS).
RBI link related to Positive Pay System : https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11969
In this article we will understand everything you should know about the Positive Pay System.
What is Positive Pay System? | How does Positive Pay system work? | How to use Positive payment system? | Advantages and disadvantages of Positive Pay System.
Table of Contents
What is Positive Pay System?
The positive payment system is an electronic authentication mechanism designed by RBI to enhance extra security during cheque related transactions.
This facility is effective from January 01, 2021
Under this system, the issuer of a cheque is required to submit below mentioned details to their drawee bank.(Bank where cheque issuing customer has account)
Details required
- Payee Name/ Beneficiary Name
- Account Number of the customer
- Issuer Name
- Cheque Number
- Cheque Amount
- Cheque Date
- Cheque Alpha number (Not applicable on all banks, only few bank like Punjab National Bank (PNB) use this)
- Short account number or SAN code (applicable in union bank)
These details should be submitted to the Bank before 1 working day, prior to cheque presentment/Clearing date.
By use of this method, Banks reconfirm and match the key details of the cheque presented for clearing.In case of any mismatch found in the details, Bank can reject the cheque or may take any suitable action to prevent wrong payment or fraud.
Usually Positive Pay System facility is applicable on the cheque amounting Rs. 50000/- or more. But many banks provide the facility to change the limit based on the risk appetite of the customer.
How does Positive Pay system work?
Before issuing a cheque, the account holder must share the relevant details, Including Payee name, Amount, Issue Date etc with their bank through designated channels such as email or other digital platforms like internet banking or mobile banking service.
When the cheque is presented to the bank for payment through the CTS clearing system, The bank will match the details submitted in the positive pay system with the details available on the cheque.
If any mismatch is found in the details, the Bank will reject the cheque or will take appropriate action to prevent any unauthorised transaction.
How to use Positive Pay System?
To use Positive pay system facility, one time registration is required by some bank like SBI.
One time registration process is not available with other banks.
Customer can avail this facility through any of these channel
- Self visit the branch and submit the details
- Internet Banking
- Corporate internet banking for corporate customers
- SMS Banking
- Mobile Banking
- By sharing Email : In some banks like HDFC bank, details can be shared through registered email id.
- For corporate / Institution where the number of cheques issued is large. They can share the details over email using a consolidated Excel. This facility is limited with few banks only, for example HDFC Bank.
Use of Positive Payment System is being mandatory by Banks.For example Punjab National Bank makes it mandatory to use PPS from April 05, 2023 for the cheque amount more than 5 Lakhs.For Indian Bank, Positive PAyment system is mandatory from August 15, 2021 for cheque above Rs 2 Lakhs.
Advantage of Positive Payment System
It provides extra shields to protect the cheque related fraud.
Also any cheque which is presented in the Positive Payment system is only accepted for dispute resolution mechanisms under Cheque Truncation System (CTS) grid by NPCI.
Disadvantage of Positive Payment System
Sometimes it is an additional burden on the customer to submit the details on the Positive Payment System portal.
Many banks allow single entry for single cheque. It will be cumbersome for the customer to enter all the details multiple times if there are many cheques issued at the same time.
faq – positive pay system
What is positive pay system by RBI?
The Positive Pay System is an electronic authentication mechanism introduced by the Reserve Bank of India (RBI) to enhance the security of cheque transactions.
What is the minimum amount for Positive Pay System (PPS) ?
Rs. 50000 and above, but some banks provide facilities to set the limit as per their requirement.
Is it mandatory positive pay system?
Some bank like Punjab National Bank, Indian Bank has made it mandatory for using PPS for the cheque above limit set by bank.
What is the maximum limit for Positive Pay System (PPS)?
No such maximum limit, any cheque more than 50000 can be used under this facility
Is cheque rejected due to positive pay?
If it is mandatory by bank to submit PPS, Bank can return the cheque with out positive pay confirmation
What if positive pay is not done?
If it is mandatory in your bank, Bank can reject the cheque
Although it is not mandatory by all banks, but cheque which does not have positive pay confirmation, those cheques can not be accepted for dispute resolution mechanisms under Cheque Truncation System (CTS) grid by NPCI.
How much does positive pay cost?
There is no cost to use this facility. For all Bank it is free.
Can i modify the details submitted in Positive Payment System?
No, The details once submitted, can not be changed or modified.
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