WHAT IS THE REGULATORY CHANGE?

The Positive Pay System, developed by the National Payments Corporation of India, is a process of reconfirming the key details of large value cheques. Under this system, a person issuing the high-value cheque submits certain details of that cheque like date, name of the beneficiary/payee amount etc to his bank in advance. This helps the bank to verify the authenticity of the cheque before clearing the payment.

The facility has been enabled by most Indian banks for all account holders issuing cheques for amounts of Rs50,000 and above. Currently, it is optional for the customer to utilise the facility. However, going forward, the RBI has advised banks to making it mandatory for in cheque payments exceeding Rs500,000.

Bloomberg ■ India’s central bank, the Reserve Bank of India had issued guidelines to implement this system from January 1.