If you do not have Internet banking access for your savings bank account, then you may find it tedious or cumbersome to issue cheques above Rs 50,000 in value depending on the bank on which it is drawn. This is because some banks, such as Axis Bank, have made positive pay system mandatory for high value cheques whereby customers are required to inform the bank about the cheque details via net/mobile banking or physical visit to the branch. The bank must be so informed prior to the cheque being presented for clearing else the cheque will not be rejected. This can create problems for people, especially senior citizens, who have not taken access to net/mobile banking either due to security concerns or due to unfamiliarity with electronic transaction methods.
Some other banks, such as State Bank of India (SBI), Kotak Mahindra Bank, have also started implementing the positive pay system for cheques above Rs 50, 000 but these banks have made it optional for customers. Some of the banks implementing positive pay have started calling customers who have issued the high value cheques to verify the details. This method would obviously be more customer-friendly as the latter would not be unduly inconvenienced. However, ensure that call is picked up or else cheque will be rejected from clearing.
The positive pay system is a process of reconfirming the key details of high-value cheques.
The Reserve Bank of India (RBI) had directed banks to implement this system from January 1, 2021, to safeguard against cheque frauds.
Many banks have recently started sending SMS and emails to their customers informing them about the implementation of the new system.
For instance, Kotak Mahindra Bank has sent an email to its customers informing them that they can now make use of the facility of positive pay for issuing cheques amounting to Rs 50,000 and above. However, Axis Bank has informed its customers via SMS that with effect from September 1, 2021, cheques issued for amounts above Rs 5 lakh will mandatorily have to go through the positive pay check.
What is Positive Pay System?
Under the positive pay mechanism, the cheque issuer, i.e., you, will be required to verify certain details of the cheque issued by you to ensure that it is cleared i.e., processed and debited from your bank account. These details include cheque date, 6-digit cheque number, amount, beneficiary name etc. This can be done either by visiting the bank branch or by logging into your internet banking or mobile banking account. Some banks may also offer customers the facility of informing via SMS, ATM or email.
As per the RBI guidelines issued last year, banks can enable this facility for all account holders for cheque amounts of Rs 50,000 and above at the discretion of the account holder. However, banks may consider making it mandatory for cheques of above Rs 5 lakh.
Thus, a customer needs to check with his/her bank if it has implemented the positive pay system and from when this mechanism will come into effect.
Leading banks which have implemented positive pay system
Axis Bank has made it mandatory for every cheque above Rs 5 lakh to go through the positive pay mechanism. Axis Bank customers can submit cheque details through the positive pay system form available at the nearest branch during the branch's working hours or via Mobile Banking, Retail Internet Banking and Corporate Internet Banking.
To verify cheque details via internet banking, a customer can login to his/her net banking, select option 'Services', then 'Cheques Services' and then 'Positive Pay'. You will be required to enter beneficiary/payee name, cheque number, cheque amount and date.
As per an SBI branch manager at the Dilshad Garden branch in North-East Delhi, a customer can opt for positive pay mechanism and set up his/her own limit. The customer can also opt for positive pay mechanism for all cheques. Once opted, if the cheque amount exceeds that limit (or for all cheques, as the case maybe) only then will the positive pay mechanism kick in. If it has been opted for all cheques, then you will be required to ensure that you verify all the cheques either via Internet banking, mobile banking or by visiting a bank branch. If the cheque is not verified by you, then it will not be cleared.
As per the email sent by Kotak Mahindra Bank to its customers: You can provide Positive Pay data for the cheques amounting to Rs. 50,000/- and above issued by you (viz. cheque date, 6-digit cheque number, amount, beneficiary name) either by logging in to the latest version of Kotak Net Banking, through Mobile Banking or by visiting the nearest bank branch on the day the cheque is issued by you or before it is handed over to the beneficiary. Availing this facility will be at the discretion of the customer. Existing clearing process will continue without positive pay check.
As per the ICICI Bank website, if a customer opts for positive pay mechanism for a cheque, then the information will have to be validated via Internet banking or the iMobile App. The information can be validated using Internet banking as follows: Service Request>Bank Account>Cheque Book/DD Related>Positive pay.
As per the HDFC Bank website, the bank has introduced positive pay mechanism for all cheques of Rs 50,000 and above. If the cheque is issued by you, then you are required to share the details of the cheque issued at least 24 hours before the cheque is presented for clearing via email. An individual will be required to enter the following information in the below sample email format with the attached excel sheet as a confirmation of the cheque issued:
a)Serial number
b)Customer's account number
c)Cheque number
d)Cheque issue date
e)Cheque amount - the amount should not be comma separated
f)Beneficiary name - Beneficiary of the cheque issued by account holder
As per the bank website, the details need to be sent to specified email IDs depending on where the bank branch is located. For customers in northern regions like Delhi, Punjab etc., the information will have to be sent to [email protected]. Similarly, customers in south Indian states like Tamil Nadu, Kerala etc. the information will have to be sent to [email protected]. Customers from the eastern region will have to send the email to [email protected] and customers from western region will have to send the email to [email protected]. However, according to the bank manager at HDFC Bank's Dilshad Colony branch, the customer will get a call for the verification of the cheque issued.
Why was positive pay mechanism introduced by RBI?
As mentioned above, the RBI had announced the positive pay system for Cheque Truncation System (CTS) in its August 2020 bi-monthly monetary policy. The guidelines for the same was issued in September 2020. The aim of the positive pay mechanism is to reduce the instances of cheque frauds. As per the central bank, "The CTS-2010 standard specifying minimum-security features on cheque leaves acts as a deterrent against cheque frauds, while standardisation of field placements on cheque forms enables straight-through-processing by use of optical / image character recognition technology. To further augment customer safety in cheque payments and reduce instances of fraud occurring on account of tampering of cheque leaves, it has been decided to introduce a mechanism of Positive Pay for all cheques of value ?50,000 and above."
