Reserve Bank of India introduces Positive Pay mechanism |ForumIAS

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News: Reserve Bank of India(RBI) has introduced a Positive Pay mechanism to make cheque payments safer and reduce instances of frauds.

Facts:

What is Positive Pay Mechanism? It is a fraud detection tool adopted by banks to protect customers against forged, altered or counterfeit cheques.
How does it work? It cross verifies all details of the cheque issued before funds are encashed by the beneficiary. In case of a mismatch, the cheque is sent back to the issuer for examination.
Significance: 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 his/her account.