Positive Pay System

Why in news?

• On January 1, 2021, the Reserve Bank of India (RBI) will introduce the ‘Positive Pay System’ for cheque transactions above Rs 50,000 in a bid to enhance safety and eliminate frauds.

About the system:

• The concept of Positive Pay involves a process of reconfirming key details of large-value cheques.
• Under this process, the issuer of the cheque submits electronically, through channels like SMS, mobile app, Internet banking and ATM, certain minimum details of that cheque (like date, name of the beneficiary, or payee and amount) to the drawee bank, details of which are cross-checked with the presented cheque by Cheque Truncation System (CTS).
• Any discrepancy is flagged by CTS to the drawee bank and presenting bank, who then take redressal measures.

What type of cheques will come under Positive Pay?

• Banks will enable the new system for all account holders issuing cheques for amounts of Rs 50,000 and above.
• While availing of this facility is at the discretion of the account holder, banks may consider making it mandatory in case of cheques for amounts of Rs 5,00,000 and above.
• The National Payments Corporation of India (NPCI) will develop the facility of Positive Pay in CTS and make it available to participant banks.
• The RBI says the Positive Pay system is to augment customer safety in cheque payments and reduce instances of fraud occurring on account of tampering of cheque leaves.

Prelims Question

Consider the following statements National Payments Corporation of India (NPCI): 
1.NPCI is a wholly owned subsidiary of Reserve Bank of India.
2.Currently UPI is the only payment platform managed by NPCI.
Which among the above statements is/are correct?
(a)1 only 
(b)2 only 
(c)Both 1 and 2
(d)Neither 1 nor 2

Answer to prelims question