Plea to RBI to modify PPS cheque clearing system
BILKULONLINE
Surat, Jan 24: The Reserve Bank of India (RBI) has been requested to carry out modifications in the PPS (Positive Pay System) to clear high-value cheques. This would be of great help to a large number of small and medium-sized businesses across the country. Â
In a letter to the Reserve Bank of India (RBI) Governor, Hitesh Mehta of Surat-based Archana Agency, an FMCG distributor says the bank should have a provision in their software system under which the number of all the cheque instruments are entered at the time issuance of instruments so that while confirming PPS only exact amount is needed and that can be done by distributors and dealers. If this is done, clearance will be hassle-free and seamless. Â
To make cheque transactions safer, the RBI has directed all banks to introduce the Positive Pay System (PPS) effective January 1, 2021. PPS enables an additional security layer to the cheque clearing process wherein the cheque issuer submits cheque details. When the beneficiary submits the cheque for clearing, the presented cheque details will be compared with the details provided to the bank through PPS.
Sharing the cheque details through PPS for cheques amounting to Rs 5 lakhs and above has been made mandatory by banks. In case of non-submission of PPS details by the customers, cheques with value amounting to Rs 5 lakhs and above will be returned to the presenting bank with return reason description “Positive Pay details not available” once the cheque is presented through CTS clearing.”
Mehta runs an agency engaged with the distribution of FMCG products. For the said purpose, his agency has been associated with M/s Mondelez India Foods (Pvt Ltd) and several other companies dealing in reputed brands. All the payment transactions with the companies are made through banks.Â
Mehta says, “As such banks do have the serial numbers of all cheque instruments with them. Therefore, banks are only required to make provisions for activation and capture the relevant details from their databank. We are sure such provision in the banking software will not be a great deal.”
According to Mehta, businesses at large appreciate the provision of PPS in cheque clearing systems, which may be helpful for processing transactions accurately and for the correct party.
However, banks require PPS confirmation every time a cheque is presented, which becomes cumbersome and delayed while gathering accurate details from the payee company.Â
“The fact of the business is that we provide cheque instruments to payee company in advance, and the payee company deposits the same for the amount of payment and at times after adjusting the due credits. Such a scenario creates stress on the process and the system. This is so, mainly due to the need for PPs for every instrument being recorded by the bank,” Mehta argues.Â
Mehta says this modification will also benefit many business establishments. “I am hopeful that both the RBI and the government will consider this communication favourably in the larger interest of small business establishments,” he adds.Â
“Also, we appreciate the alertness and business-friendly approach of the RBI. An advisory from the RBI to all the banks will ease operational issues of dealers like us,” Mehta sums up.Â
Copies of the letter have been sent to the finance minister Nirmala Sitharaman and commerce minister Piyush Goyal. Â
Developed by the National Payments Corporation of India (NPCI), the Positive Pay System is a process of reconfirming the key details of large value cheques. Under the system, a person issuing the high-value cheque submits certain essential details of the cheque like date, name of the beneficiary or payee amount, among others, to the drawee bank.Â
The details can be submitted through electronic means such as SMS, mobile app, internet banking, ATM etc. The details are cross-checked while issuing the cheque, and any discrepancy is flagged.
