 Hello my dear friends and Chanakya fraternity, I Krishnakumar welcome you all to today's topic of discussion positive pay system We will be analyzing that How this news would be important for the UPSC civil services exam and how it can benefit the civil services as parents positive pay system We will be discussing that what is this positive pay system and what was the need to introduce the system But we have discussed this topic In our earlier videos on hdi and pm1. Please watch these videos to get over the concept. Okay, but Let me know that what is this what is this image is letting telling you We will be discussing that what this image is about and what is the purpose of this image here Actually, it shows that some person is using mobile and sending some data Okay, we will be discussing this image, but after In the end of the video So we will be discussing that Why it is in news and what is the context of this discussion? What is the context of positive pay system positive pay mechanism? What is positive pay system? Okay, recently Banks had witnessed a rise in frauds involving high value checks. Okay so recently there was A high amount of frauds in the value of checks that was drawn to the banks On uh, january 1 2021 the rbi will introduce the positive pay system for check transactions ever 50 000 Okay, and as per rbi governor chakti kantadas The positive pay system is introduced to enhance the safety of check for all the checks of value rupees 50 000 and ever So this system is being introduced to enhance the safety of check payments. Okay, and to reduce the level of frauds so this system Will cover the 50 000 cap and it will be covering approximately 20 percent transactions by volume and 80 percent by value so What is positive pay mechanism? And why it is being introduced? So the positive pay mechanism is being developed by the npci national payments corporation of india npci has also developed one uh, upi. Can you please tell me what is that? In the comment section. Okay, so to reduce check related frauds The reserve bank of india has asked banks to implement a system called positive pay from january 2021 This system will add an extra layer of security to the high value of checks. Okay, and positive pay system is a fraud detection tool What it is? It is a fraud detection tool Adopted by banks to protect to protect customers against forged altered or counterfeit checks It will be cross check all details It will cross check all details of the check issued before funds are encouraged by the beneficiary This system will cross check all the details of the check issued before funds and encouraged by the beneficiary And in case of a mismatch The check is sent back to the issuer for the examination. So you can see that this is the concept to reduce the frauds Okay By following such a system the bank knows of a check being drawn by the customer even before it is deposited by the beneficiary Into his or her account So what? So under this process The issuer of the check submits Through channels like sms mobile app internet banking and atm. Okay. These are all electronic mediums These are all these are all electric We shall have certain minimum details of the check like date of the check name of name of the beneficiary or payy details Or what is the amount of the that check? So he will transmit that information electronically with a drawy bank So what is drawy bank? Drawy bank is the bank that caches your check Okay Bank Caches your check Okay So details of which are cross checked by the check transportation system So what is this check transportation system? Actually Check transportation system is an interface check transportation system is an interface interface with process And verify the details of the check Okay So now you can see in this slide that how check transportation system works So it will collect checks from the bank branch And then it will send the bundle of checks to the service bank After that It will store the spend image of check and other relevant data. Okay, and then Service bank will send this data to the clearing house Okay, and then clearing house will assess this data and determine a settlement amount And further the clearing house transmits the data to the drawy bank What whose drawy bank? Drawy bank is the bank that caches your check And through this clearing house interface clearing house interface This data is accepted by the drawing drawy bank and after that your payment will be processed to your account Or if the information is wrong, then the chalk check would check would be rejected And the return files through return clearing session would be given. Okay So what are the benefits of this check transportation system? There are actually two types of Authorities or two types of individuals that are involved in the benefits First one is customer And second one is bank both are being benefited from this check transportation system So for customers or for the users of the bank There is no fear of loss of check in transit. Okay And faster credit of funds will be insured by this check transportation system This system is more secure and there is lesser chances of fraud And through this check check transportation system, we can ensure multi city checks that could be cleared in the same day And as banks are also the authority in this as banks are also the beneficiaries under this check transportation system So it would also benefit the banks how it would benefit banks It will reduce the cost of transit and errors due to manual work. Okay And then reconciliation will be easy and faster The time taken to clear the checks will be shorter There is operational efficiency as it would be maintained by the central system And after that it will reduce the risk Okay so We will be discussing that how does this positive pay mechanism will work Under positive pay feature The issuer have to first share the details of the check like What can be the details details can be the check number? Okay The date of the check name of the pay account number or what is the amount? And the likes through his or her net banking account. Okay along with these details the issuer or the Person who has issued the check has to send The front and reverse side of the check Okay Before handing it over to the beneficiary So when the beneficiary submits the check for the engagement to the banks The details would be compared by the bank through the positive pay system And if the details will match then only the check will be honored However, in the case of mismatch the check is referred to the issuer In this way any check where any short of fraud has happened cannot be cleared at all and hence the depositors money can be protected So What are the what kind of checks or what are the details that To how much amount the checks can come under the ambit of positive pay So the banks will enable the new system for all account holders issuing checks for amounts of rupees 50,000 and ever so checks up to the amount of rupees 50,000 can be in the ambit of Positive pay system and while availing of this facility This facility the availability of this facility is at the discretion of account holder Banks may consider making it mandatory in case of checks for amount of rupees 50,000 and ever It depends on the bank that either they want to make it mandatory for the checks above the amount of five lakh Okay For banks it would be mandatory to To apply this payment. Sorry positive pay system for the value of checks that are above rupees five lakh Okay And there is such instance that ICICI bank has been using this positive pay system since 2016 for all checks Irrespective of the amount via its iMobile application Okay, so what are the advantages of positive pay mechanism? The first and the foremost four most advantages for prevention after that Positive pay works as an insurance for customers If like how it is an insurance like if an insurance account if an account holder Shares the details of the issued check and this bank is still clear as a fraudulent check The owners is on the bank and not on the customer. This is how it will work like an insurance for the customer so typically What happens? Typically when a fraudulent transaction happens through checks It is difficult to put the owners either on the customer or the banks and banks don't take any responsibility If the signature and check are left leave are genuine. So customers got irritated and They they think that banks are not doing enough. So this is how the positive pay mechanism will benefit the banks as well as customers So even if your bank doesn't make the positive pay system mandatory Opt for it. You should have to opt for it to avoid falling victim to the banking fraud RBI has already told banks to create adequate awareness Among their customers on features of the positive pay system through SMS displays in branches at ATMs Okay, and on their websites of the bank through internet banking and various other mechanisms. So RBI has given banks this responsibility to publish the positive pay mechanism in the larger domain of the public. So concluding this discussion we can say That in a nutshell we can say that positive pay mechanism is a shock check fraud detection tool. Okay it is used To control or reduce the frauds related to the check Okay And it is a service that matches the account number check number Okay That and check presented for the payment it And the check presented for the bank so that the check frauds can be reduced. How does it work? First the issuer will issue the check Okay, and then the check data would be sent to the bank through T platforms or through the electronic platforms now this data of the check would be verified. Okay By which bad checks would be sorted out from the system And the issuer will be notified that some malicious activity has been happened over his check So bad checks would be returned and there would be reduction in frauds So how one can participate in positive pay mechanism? You have to find out what your bank's positive pay program is And after that you should have to look for a software solution designed to submit the data to your bank And after that you just have to configure the software for use Concept of positive pay mechanism as well as How it would be leading to reduction of Check frauds so in the beginning of this discussion I have shown you this image that how you're perceiving this So now we would be discussing that what is the importance of this image actually this image is nothing But it tells you that there is a user that is using his mobile to transmit his check data related check data to the banks Show that he could Confirm or assure that his check would not be used maliciously. Okay So thank you very much for listening this discussion I hope you all Are working hard to ensure your dream come true. Okay, so thank you very much Keep learning keep watching. 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