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.
