RBI governor announces 'positive pay' feature to help avert cheque frauds

RBI Governor Shaktikanta Das on Thursday said that the banking system will move to a positive pay practice in cheque transactions to curb frauds.

Under the 'positive pay' system, a customer who issues the cheque clicks a picture of the cheque before handing it over to the beneficiary and uploads the same on the bank's mobile application.

"To enhance safety of cheque payments, it has been decided to introduce a mechanism of 'Positive Pay' for all cheques of value Rs 50,000 and above, Das said after announcing the bi-monthly policy review.

The limit of Rs 50,000 will cover approximately 20 per cent of transactions by volume and 80 per cent by value, he said, adding operational guidelines in this regard will be issued soon.

Since 2016, the second largest private sector lender ICICI Bank has such a facility for all cheques irrespective of the amount.

By following such a system, a bank knows of a cheque being drawn by the customer even before it is deposited by the beneficiary into her account. Before clearing transfer of funds, the bank's executive can cross-check the details of the cheque which has come for clearance with the one shared by the customer in advance, banking experts said.

With the help of this technique, any cheque where any sort of fraud has happened cannot be cleared at all and hence a depositor's money can be protected, they added.