Positive Pay System: Why it is useful for a cheque

BANKING SERVICES

The positive pay system, Reserve Bank of India (RBI) had announced the introduction of the Positive Pay System for Cheque Truncation System (CTS) and has been implemented from 01 Jan 2021 for the large value cheques.

The concept of Positive Pay involves a process of reconfirming key details of large value cheques.

  1. Under this process, the issuer of the cheque submits electronically, through channels like SMS, mobile app, internet banking, ATM, etc., certain minimum details of that cheque (like date, name of the beneficiary/payee, amount, etc.) to the drawee bank.
  2. And the details of which are cross-checked with the presented cheque by CTS. Any discrepancy is flagged by CTS to the drawee bank and presenting bank, who would take redressal measures.
  3. National Payments Corporation of India (NPCI) hav develop the facility of Positive Pay in CTS and made it available to participant banks. Banks, in turn, have enable it for all account holders issuing cheques for amounts of ₹50,000 and above.
  4. 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 ₹5,00,000 and above.

What is Positive Pay?

Positive Pay is an electronic authentication system in which you will share the cheque details with your bank before the bank processes it. This additional security layer is meant to address the rising instances of cheque fraud. In this authentication system, banks will do the cross-checking of the presented cheque with the details provided by the cheque drawers and can stop the cheque in the CTS process if found any discrepancy in the details.

What is Positive Pay System (PPS)?

A positive pay system is a fraud-prevention system offered by most commercial banks to their customers to protect them against forged, altered, and counterfeit cheques. Under this process, the issuer of the cheque submits electronically, through channels like SMS, mobile app, internet banking, ATM, etc., certain minimum details of that cheque (like date, name of the beneficiary/payee, amount, etc.) to the drawee bank. And the details of which are cross-checked with the presented cheque by CTS.

What are the features of Positive Pay?

  1. Positive pay is a fraud-prevention system offered by most commercial banks to their customes to protect them against forged, altered, and counterfeit cheques.
  2. Identity thieves and fraudsters often try to create and cash counterfeit cheques, and those cheques could be cashed.
  3. The issuer of the cheque submits electronically, through channels like SMS, mobile app, internet banking, ATM, etc., certain minimum details of that cheque (like date, name of the beneficiary/payee, amount, etc.) to the drawee bank.
  4. The bank will compares the details to the actual cheque, flags any that do not match, and notifies the drawer.
  5. The drawer then tells the bank whether or not to cash the cheques and the banking officials will do as per the confirmation.

How does Positive Pay work?

  1. According to the RBI, while most retail consumers prefer to use electronic alternatives such as NEFT and RTGS, cheques are still a popular option now.
  2. Before you issue a cheque, you need to share cheque details like name of the payee, issue date, and amount and send it to your bank via email or net banking.
  3. When the cheque is presented to the bank for payment via CTS Clearing, the bank will compare the instrument details received against the details you send.
  4. In case of any mismatch, the bank may review it for suitable action through the confirmation call.

How to share details with Positive Pay?

It is very simple to share cheque details to the bank by different options offered by banks such as

  • First of all, you will issue a cheque of amount above the defined limit (50000) or 5 lac for compulsory positive pay)
  • After issuing a cheque, drawee will present the cheque in his bank in CTS.
  • The drawer required to submit cheque details by positive pay option before 1 working day to the presentment of cheque to the bank. such as, payee name, date, amount, cheque number, etc.
  • For Positive Pay option, you can check your internet banking in which you will see positive pay option then just click on it and enter the required details of cheques.

What are the steps for using Positive Pay on Internet Banking?

You can use these simple steps in your bank net banking-

  1. First of all, Login into your Banks internet banking portal.
  2. For submission of PPS data, go to General Services -> Positive Pay -> PPS Entry
  3. On the PPS request entry page just fill the cheque/instrument related details.
  4. Internet Banking validates cheque status, cheque should be unused.
  5. Enter the Transaction password and OTP and then click on SUBMIT button.

Notes for account holders in reference of Positive Pay

  1. Positive Pay System is enabled for all account holders and is option for customers to update details of cheques of Rs.50000/- and above.
  2. In respect of cheques issued for an amount of INR 5.00 lakh and above, we strongly recommend our account holders to update the cheque details in J&K Bank Positive Pay System, as advised herein above.
  3. Customers are advised to feed correct details of the cheque including correct spelling of payee’s name and the exact amount of the cheque to the Bank for successful positive pay confirmation. There is no option for Modify/Delete confirmation in any mode because modification could not take place once the data will be submitted to NPCI. Bank will not be responsible for any incorrect information provided by a Customer.
  4. In case of mismatch in details on the cheque with the details uploaded under the PPS system, if otherwise in order viz. sufficient funds, signature match etc., Bank shall, at its sole discretion, return the cheque with the remarks “REFER TO DRAWER”, at the sole risk, responsibility and liability of the Customer.
  5. If no data is uploaded under Positive Pay System by the Customer, such cheques issued will still be cleared in a normal mode as per extant guidelines. However the account holder shall be solely responsible in such cases for any discrepancies and will not be able to raise any dispute over any undue clearance or return and the Bank will not be liable for any such development.
  6. As per Reserve Bank of India directions, only those cheques which are entered in the Positive Pay System and are compliant with above instructions will be accepted under dispute resolution mechanism at the CTS grids.
  7. The confirmation of successful or unsuccessful update on PPS is provided by NPCI and information of the same will be shared with the customer accordingly.
  8. Cheques presented in Clearing are validated as per the regulatory guidelines defined for CTS Clearing. PPS system is an additional tool for validation of cheques. All other parameters with respect to validation of Cheques remain unchanged.
  9. The Bank shall not be responsible for any losses or delays which may be caused by any circumstances beyond its control, or for any act, omission, neglect, default, failure or insolvency of any correspondents, agents or their employees or any third party systems.
  10. For any further clarifications, should call on toll free numbers of your bank or should visit your nearest Bank branch.

What are the flags used by NPCI for PPS?

FlagDescription as per NPCIExplanation
PInstrument validated with PPS No. mismatch in Cheque number, Drawee bank MICR, and AmountPPS details match with CTS data
DDuplicate instrument already presented. No mismatch in Cheque No, Drawee bank MICR and AmountInstrument already presented, duplicate record
YAmount Mismatch. Cheque number and Drawee bank MICR have matched with PPSAmount on cheque & PPS does not tally, other details match VIC. Cheque no. & MICR
ZDuplicate instrument already presented. Amount mismatch. Cheque no and Drawee bank MICR matchedAmount/Payee do not match, the instrument already presented with PPS mismatch
NInstrument not part of PPS dataNo PPS record found, cheque no. not present

Is Positive Pay compulsory?

It is not mandatory to use Positive Pay System. However, cheques issued at a value greater than Rs 50,000 shall be accepted for dispute resolution mechanism under the CTS grid only if the Positive Pay facility is used by the account holder. But As per RBI guidelines, In some banks, details of the cheque are compulsory through Positive Pay if the cheque amount is more than 5 lac for example axis bank. As per axis bank, cheques of ₹ 5 lakh & above will be returned if Positive Pay details are not submitted 1 working day prior to cheque presentment/clearing date.

What is the benefit of the Positive Pay?

  1. Implementing ‘Positive Pay’ will increase safety in cheque payments.
  2. It will reduce instances of fraud occurring on account of tampering of cheques.
  3. Positive Pay is a fraud detection tool adopted by banks to protect customers against forged, altered or counterfeit cheques.
  4. It cross verifies all details of the cheque issued before the cheque is encashed by the beneficiary.

Why is it important for me to use Positive Pay?

The Positive Pay System is a step taken to safeguard the cheques issued from alteration/ forgery and avoid any fraud. If the Positive Pay facility is not used, any claim raised against the particular cheque will not be accepted under the dispute resolution mechanism at RBI.

If Positive Pay is not used by the account holder, will the cheque be processed?

Yes, the cheque will be processed in normal mode even if the account holder does not use Positive Pay. However, any issue in relation to the cheque will not be accepted for dispute resolution mechanism under Cheque Truncation System (CTS) grid by NPCI.

What if there is a mistake made while entering details of cheques issued in Positive Pay?

In case of any mismatch while entering details in the Positive pay system then Bank has the right to return the cheque.

Further faqs for Positive Pay

  1. What is the limit of Positive Pay?

    RBI has told banks to enable the facility for all account holders issuing cheques for amounts of ₹50,000 and above. And Compulsory above 5 lac.

  2. Who will share details in Positive Pay?

    The drawer of a Cheque will share details of the cheque to the bank through internet banking 24 hours prior to the presentment of the cheque to the bank.

  3. When are positive pay details required to submit?

    Details of cheque required to be submitted prior to one working day to the presentment of cheque in the CTS.

  4. I Forget to enter detail in Positive pay, will the cheque be cleared?

    If no data is uploaded under Positive Pay System by the Customer, such cheques issued will still be cleared in a normal mode as per extant guidelines. However, the account holder shall be solely responsible in such cases for any discrepancies and will not be able to raise any dispute over any undue clearance or return and the Bank will not be liable for any such development.

  5. I am holding a Savings bank account, do I still need to submit Positive Pay details?

    Yes. As per RBI regulation w.e.f. 01st January 2021, Positive Pay details have to be submitted by all the customers issuing cheques for the amount ₹50,000/- and above.

  6. Can I visit the branch to submit Positive Pay details?

    Yes. You can submit cheque details through the PPS form available at the nearest branch during the branch’s working hours.

  7. Can I submit the Positive Pay details through any of the digital modes?

    Yes. Following digital modes are available to submit the Positive Pay details from the comfort of your home.
    1. Mobile Banking
    2. Retail Internet Banking
    3. Corporate Internet Banking

  8. Are there any charges for using Positive Pay?

    No. Positive Pay facility is provided free of cost to all the customers of Axis Bank.

  9. What are the timings to submit Positive Pay details?

    Through digital mode, Positive Pay details can be submitted 24X7 and for sharing the details over the Bank’s counter you have to adhere to the bank’s customer visiting hours.

  10. Is positive pay necessary even if I am transferring funds through cheque to my own account with another bank?

    Yes, as RBI has been mandated to share the cheque details under the Positive Pay mechanism for all the cheques issued by the drawer

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