RBI move: Your cheque payments just got safer via ‘Positive Pay’

Every year there are several cases of cheque frauds. Creating a counterfeit cheque or forging account holder details in order to withdraw funds are quite prevalent.

To enhance the safety of cheque payments, the RBI has decided to introduce a mechanism of ‘Positive Pay’ for all cheques of Rs 50,000 and above. This measure will cover approximately 20 percent and 80 percent of total cheques issued by volume and value, respectively.

What is Positive Pay?

It’s a fraud detecting tool, which cross verifies all the details of a cheque issued before the funds are allowed to be en-cashed by the beneficiary. The issuer of a cheque shares all the details of cheque issued on the mobile application of the bank. If there is a mismatch, the bank will approach the cheque issuer for a re-examination of the cheque’s details.

“This measure ensures that your bank now has as a way of making sure that the cheque coming in for clearing has been issued by you. The cheque will not be cleared without verifying this information, which reduces the chances of fraud,” says Adhil Shetty, CEO of BankBazaar.com.

How does it work?

RBI will soon issue modalities of how this would work. But here’s an example of what it might look like.

At present, ICICI Bank is one of the banks that offers this facility. It had introduced this feature for its own customers in May 2019, to safeguard the cheques, especially high-valued ones, issued by account holders. Once the account holder issues a cheque, she has to log into her ICICI Bank mobile banking app, iMobile. There, she needs to share the details of the cheque number, date, payee name, account number, amount etc. along with images of the front and reverse sides of the cheque, before handing it over to the beneficiary.

When the beneficiary submits your cheque for encashment, the bank compares the actual cheque with the details that the account holder had keyed into her mobile app. If the details match, the cheque is honoured. In case of a mismatch, the cheque is referred to you.

Cheque images and information will be available with the bank for validation only on the next working day.

Soon, other banks are also likely to introduce the Positive Pay mechanism to enhance the safety of cheque payments.