According to CS Setty, managing director of SBI, while the usage of cheques has reduced owing to safer digital alternatives such as the National Electronic Fund Transfer and Real-Time Gross Settlement System, there are instances of fraudsters reprinting bank cheque books once they have gained access to a customer’s data. The positive pay system will likely protect the system against such transactions, he said.
“This will help us cover any liability charges associated with a fraudulent transaction and will also protect the customers against frauds. However, the customer will have to take the initiative to inform banks about their cheque details,” Setty said. “If a bank isn’t clearing a transaction for lack of the customer’s initiative, it could lead to unnecessary bouncing of cheques.”
To be sure, the relevance of cheque transactions has been coming down steadily in the banking system. As per the RBI’s monthly bulletin, the banking system reported 6.43 crore paper-based transactions on the CTS worth Rs 5,241 crore in October. A year ago, the banking system reported 8.97 crore transactions on CTS worth Rs 6,591 crore.
In comparison, the system reported 27 crore NEFT transactions worth over Rs 23,500 crore and RTGS reported 1.36 crore transactions worth over Rs 72,000 crore in October 2020.
Fraudulent transactions through cheques aren’t a big part of overall bank frauds in the country either. The banking system, according to data released by the RBI in its latest issue of Report on Trend and Progress of Banking in India, reported 202 cases of fraud worth Rs 39 crore in the year ended March 2020. In the ongoing financial year, between April and September, the system reported 76 cases worth Rs 48 crore.
Overall frauds in the banking system stood at over Rs 1.13 lakh crore during the last fiscal and Rs 64,681 crore in April-September 2020, according to the RBI report.
“The positive pay system is likely to be implemented by corporate customers more because cheques are an important instrument for them. Retail customers might find the process of reconfirming information after issuing each cheque a little troublesome,” said Bharat Panchal, chief risk officer- India, Middle East and Africa at FIS. “However, positive pay will surely result in safer transactions.”