Madurai

PIL plea in Madurai Bench of Madras HC challenges RBI’s Positive Pay System

A view of Madurai Bench of Madras High Court, in Madurai. File   | Photo Credit: ASHOK R

The Madurai Bench of the Madras High Court has sought response from RBI on a public interest litigation petition that challenged the apex bank’s notification on the implementation of ‘Positive Pay System’.

The petitioner said it went against the Negotiable Instruments Act, 1881.

A Division Bench of Justices M. Duraiswamy and K. Murali Shankar sought a response from RBI in the petition filed by advocate K. Krishna of Madurai.

He said the Positive Pay System involved a process of reconfirming key details of large value cheques. Under the process, the issuer of the cheque submitted electronically through channels such as SMS, mobile application, internet banking or ATM certain minimum details of the cheque such as date, name of the beneficiary/payee, amount to the drawee bank.

The details were cross-checked with the presented cheque by the Cheque Truncation System (CTS). Any discrepancy was flagged by CTS to the drawee bank and presenting bank, which would take redress measures.

The system would be made compulsory to payments above ₹50,000 by all banks. The drawer of the cheque had to inform the bank through electronic means with regard to details of the cheque, prior to at least one day before the presentation of the cheque. Otherwise, the cheque would be returned with the remark ‘will be returned to the presenting bank’ with return reason description ‘Positive Pay details not available’, once the cheque was presented through CTS clearing.

The petitioner said that if the Positive Pay System was made compulsory then it would lead to more number of the rebuttal of cheque cases. The reason for the implementation was said to be prevention of fraud but in reality it would lead to more fraud.

Many innocent people did not know how the banking and cheque systems worked. Fraudsters could cheat people by issuing the cheques and updating the positive pay system differently. He sought a direction to quash the RBI notification.


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Printable version | Oct 26, 2021 8:22:14 PM | https://www.thehindu.com/news/cities/Madurai/pil-plea-challenges-rbis-positive-pay-system/article36483447.ece

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