The new positive pay system for checks in the country has come into force from today.
Positive Pay System For Cheque: The new positive pay system for checks in the country has come into force from today. It was introduced by the Reserve Bank of India (RBI) in September. According to the central bank, this system is going to increase the security of check based transactions in the country. Positive pay system is an automated fraud detection tool. The reason behind the RBI’s introduction of this rule is to stop the misuse of checks. It is believed that through this system fraud can be reduced through fake checks.
What is positive pay system?
The positive pay system is a kind of tool to catch fraud. Under this system, when someone issues a check, he will have to give full details to his bank. In this, the issuer of the check will have to give the date of the check electronically through SMS, Internet banking, ATM or mobile banking, name of the beneficiary, account number, total amount and other necessary information to the bank. With this system, where payment will be secured by check, clearance will also take less time.
The National Payment Corporation of India (NPCI) will develop a positive pay facility in the Check Truncation System (CTS) and make it available to banks. This system will be applied to the payment through the check of 50 thousand or more. Check truncation is a process of clearing system checks. In this, the physical check issued does not have to roam from one place to another. The check truncation system makes the process of check collection faster.
How will the system work?
The issuer of the check can provide the necessary details through electronic means like SMS, mobile app, internet banking or ATM. After this, this information will be cross-checked before check payment. If there is any defect in it, then the bank will reject the check. Here if there is a case of 2 banks i.e. the bank whose check has been deducted and the bank in which the check has been inserted, then both will be informed about it.