What is Positive Pay System and How Does It Work?

The Reserve Bank of India had released some guidelines for the banks to implement that include Positive Pay System (PPS) from January 1, 2021, to protect customers against Cheque Fraud. 

Since then banks are advising customers about making compulsory, the Positive Pay System, a process of reconfirming the key details of high-value Cheques. As per SBI guidelines, SBI has launched PPS to make sure additional security to customers. Let's discuss it in detail: 

What is Positive Pay System (PPS)?

The PPS, created by the National Payments Corporation of India (NPCI), is a process of revalidating the important details of large value cheques. In this system, a person issuing the high-value cheque needs to provide certain crucial details of that cheque like date, name of the beneficiary/payee amount, etc. to the drawee bank. These provided details can be submitted through electronic means such as SMS, internet banking, mobile app, ATM, etc. Then the details are cross-checked during the issuance of the cheque and any discrepancy is flagged.

Limit on the Amount for PPS: 

RBI has informed banks to ensure that the facility for all account holders issuing cheques for amounts of Rs. 50000 and above. Moreover, while availing of the facility is at the discretion of the account holder, banks may consider making it compulsory in case of cheque values of Rs. 5 lakh and above.

Importance of PPS for Customers:

Some banks are informing customers that if the details of large-value cheques aren't pre-registered, the cheque is going to be returned. On issuance of a high-value cheque, customers should confirm details are submitted within the timeframe suggested by the banks for faster clearance. RBI has informed only cheques that are registered within the PPS are going to be accepted under the dispute resolution mechanism. Customers would get an SMS on whether the cheque is accepted or rejected for any reason.

Details of the Cheque that must be Submitted:

Account Number, Cheque Number, Date of Cheque, Amount, Transaction Code, Beneficiary Name, MICR Code.

How can these Details be Submitted?

These details are often submitted through the respective bank’s website, internet banking, or mobile banking. In case a customer doesn't use electronic banking services, they can submit the details by visiting bank branches.

(Source: The Hindu)