Syllabus Section: Economy
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.
Positive Pay System For Cheque Transactions
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).
Banks will enable the new system for all account holders issuing cheques for amounts of Rs 50,000 and above.
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 new measure will cover approximately 20 per cent and 80 per cent of total cheques issued in the country by volume and value, respectively.
• The Cheque Truncation System (CTS) for clearing cheques is operational pan-India, and presently covers 2 per cent and 15 per cent of total retail payments in terms of volume and value respectively.
Banks had recently witnessed a rise in frauds involving high-value cheques.Positive Pay system is to augment customer safety in cheque payments and reduce instances of fraud occurring on account of tampering of cheque leaves
Source: Indian express