This article is going to discuss some basics over the guidelines issued by the RBI on 25th September 2020 over Positive Pay System Safeguards or Cheque Truncation System.
The idea of CTS involves a process for reconfirmation of the key details over large value cheques. Under this process, the one who issues the cheque submits electronically; through different channels like mobile apps, SMS, ATM, internet banking, etc.; some of the minimum details of the cheque such as; the name of the beneficiary, date, and amount will be get cross-checked with the presented cheque through CTS. If any kind of discrepancy is flagged by CTS to the presenting bank and drawee bank, then the redressed measures would be taken.
Positive Pay System for Cheque Truncation System
As per the guidelines of RBI, the National Payments Corporation of India (NCPI) shall develop the facility of CTS and should make it available to the respective participant banks. The guideline for Positive Pay in CTS will be given to the account holders who will issue the cheques for an amount of Rs. 50,000 and above.
There are chances that people may get confused between ‘certified cheque’ and the concept of CTS but they are not the same as such. We can trace the Certified Cheque from about 30 years back. Whenever an individual issues a cheque, banks used to certify that money is duly transferred to the customer’s bank account. Whereas in terms of CTS, in the current scenario there is no compulsion for the cheque to get transfer physically for the clearance. An image for the same works accurately, in the words the digital transfer. Positive Pay will only have a positive impact when it comes in terms of safety and protection to the digital payment aspirations in India.
Banks shall enable it for all account holders issuing cheques for amounts of Rs. 50,000 and above. 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 Rs. 5,00,000 and above.
PROS and CONS of Positive Paycheck
- The RBI says that the Positive Paycheck system works to increase customers’ safety in cheque payments.
- RBI tries to reduce instances of fraud occurring on account of tampering with cheque leaves.
- CTS holds the chance to increase the strictness for the public as there will be severe consequences over defaulting.
- The idea of reconfirmation of key details provides the double security system to the Bank as well as the customer.
- RBI provides the benefits of dispute resolution mechanism at CTS to those who fall under the category and follow up the guidelines.
Talking about the cons, according to the RBI plans, guidelines are for the sake of customers only.
- The major point of negativity that reflects through this is the value of time. The process of double-checking takes time.
- Another point that can be counted under the cons can be the issue of the network. There are chances that while calling for confirmation, lines may get forwarded to the wrong person.
- There are chances that the drawer may not get the relevant communication and others may convey the bank wrong information through calls and messages on their part.
Overall, it can be said that the guidelines of the RBI are for the safety of the customers. The directives are u/s 10(2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007). When there are more pros than cons and also that cons can be avoided by taking the proper precautions; on that point, there is no harm to adopt the guidelines which are going to benefit the drawer and provide more safety.
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