New rule for check payments starting January 1: 5 things to know

The Reserve Bank of India (RBI) decided to introduce the “positive payment system” by check a couple of months ago. Under the new rule, key details may need to be reconfirmed for payments beyond 50,000. This new check payment rule will go into effect on January 1, 2021. MPC’s August announcement by RBI Governor Shaktikanta Das came to keep consumer safety in focus and reduce fraud cases. and abuse regarding payment by check.

What is a positive payment system?

Positive Pay is essentially an automated fraud detection tool. Compares specific information related to the check presented for clearing, such as check number, check date, payee name, account number, amount, and other details with a list of checks previously authorized and issued by the issuer.

Here are 5 things to know about the new rule for check payments:

1) The Positive Payment concept involves a process of reconfirming key details of high value checks.

2) Under this process, the check issuer sends electronically, through channels such as SMS, mobile application, Internet banking, ATM, etc., certain minimum details of that check (such as date, name of beneficiary / payee, amount , etc.) to the drawee bank, the details of which are verified with the check presented by CTS. CTS reports any discrepancies to the drafted bank and the presenting bank, who would take corrective action.

3) The National Payments Corporation of India (NPCI) will develop the Positive Payment facility in CTS and make it available to participating banks. The banks, in turn, will enable it for all account holders who issue checks for amounts of 50,000 and more.

4) Although the use of this service is at the discretion of the account holder, banks may consider making it mandatory in the case of checks for amounts of 5,00,000 and more.

5) Only those checks that comply with the above instructions will be accepted under the dispute resolution mechanism in the CTS networks. Member banks can also implement similar arrangements for checks cleared / cashed outside of CTS.

Banks are advised to create adequate awareness among their customers about the features of the Positive Payment System through SMS alerts, display at branches, ATMs, as well as through their website and internet banking.

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