Adhering to the Reserve Bank of India’s mandate, the Bank of Baroda (BoB) is making Positive Pay System (PPS) confirmation essential for cheques of Rs 5 lakh and above starting August 1.
As per the mandate, the bank may refuse to clear cheques if customers don’t abide by the PPS formalities.
Here is everything about what is positive pay system and what you need to keep in mind.
What is the positive pay system?
PPS is a part of the cheque clearing system. Under this, the drawee bank will process cheques for payment by verifying the information provided by the account holder at the time of issuance of the cheque.
As part of the PPS, the drawer re-confirms critical details about the cheque with the bank, which will be cross-checked with the presented cheque when processing the payment.
RBI introduced PPS in September 2020 for account holders issuing cheques for amounts over Rs 50,000.
"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 lakh and above," the RBI had said.
Since August 1, 2022, many banks have made PPS registration mandatory for customers. BoB notified in June: "As per the RBI directive, PPS will be mandatory from August 1 for cheques issued for Rs 5 lakh and above. Such cheques will be rejected if positive pay confirmation is not provided."We are committed to making your banking transactions secure. And with the Positive Pay System, we are here to offer you protection against cheque frauds. With #BankofBaroda, #StaySafeBankSafe pic.twitter.com/dkWkHz3RqU
— Bank of Baroda (@bankofbaroda) May 12, 2021
What do customers need to do?
In simpler terms, the person who issues a high-value cheque (for Rs 5 lakh and above) will be required to submit a few details to the drawee bank. Customers must provide six mandatory details for positive pay confirmations — the payee's name, the cheque date, the amount, the account number, the cheque number and the transaction code.
This information can be submitted through email, mobile banking apps, and internet banking.
Now, when the cheque is presented to another bank for processing, the details submitted will be verified. If the details match, the payment will be processed, and the money will be given to the depositor. If they don’t, then the cheque will be returned unpaid.
Several banks, including State Bank of India (SBI), ICICI Bank, Punjab National Bank, Axis Bank, and HDFC Bank, have already implemented PPS.
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