Cheque rule update: High-value cheques may bounce if this new rule isn't followed

Bank of Baroda (BOB) customers from February 1 will have to comply with changes made to its cheque payments system. As per the changes, customers are requested to provide the bank advance intimation of high-value cheques issued to beneficiaries. 

"BOB Customers are requested to provide us advance intimation of cheques issued to the beneficiaries so that Bank at the time of presentment for payment in CTS clearing (as well as on counter) can pass the High Value cheques without any re-confirmation phone call by your base Branch," read an official notification issued by BOB. 

The changes at BOB come in light of recent RBI guidelines. Earlier, RBI had issued guidelines to Banks directing them to implement a new system from January 1, 2021,  as a deterrent against cheque frauds.

"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 Rs 50,000 and above," the RBI had noted.

What is Positive Pay System?

As per the Positive Pay System, once an account holder issues a cheque to any beneficiary, the account holder will have to share cheque details with their bank. The details to be shared with the bank include cheque number, cheque date, payee name, account number, amount, etc. Account-holders will also have to share an image of both the front and the backside of the cheque before they hand it over to the receiver. 

Before making the payment to the beneficiary, the bank will cross-check all the details available on the cheque with the ones given to it by the account holder. If the details match, then the cheque would be cleared.

If there is a discrepancy in details, the same will be flagged by CTS to the drawee and the processing bank, which will have to take redressal measures. As per the RBI guidelines, only those cheques which are compliant with these instructions will be accepted under the dispute resolution mechanism at the CTS grids.

Positive Pay System: Limit

Positive Pay System has been put in place for clearing high-value cheques. The bank shall implement the system for all account holders who issue cheques for amounts Rs 50,000 or more. The account holder has the choice of also utilising the system for low-value cheques. Banks may consider making the system mandatory for processing all cheques above Rs 50,000 or more. 

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