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In September 2020, the Reserve Bank of India decided to introduce the 'positive pay system' from 1 January 2021 for cheques, under which re-confirmation of key details may be needed for payments beyond ______.
1. Rs. 50,000
2. Rs. 75,000
3. Rs. 55,000
4. Rs. 60,000

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Correct Answer - Option 1 : Rs. 50,000

The correct answer is Rs. 50,000.

  • In September 2020, the Reserve Bank of India decided to introduce the 'positive pay system' from 1 January 2021 for cheques, under which re-confirmation of key details may be needed for payments beyond Rs. 50,000.

  • The concept of a Positive Pay System involves a process of reconfirming key details of large value cheques.
  • Under this process, the issuer of the cheque submits electronically, through channels like SMS, mobile app, internet banking, ATM, etc., certain minimum details of that cheque (like date, name of the beneficiary/payee, amount, etc.) to the drawee bank, details of which are cross-checked with the presented cheque by CTS (Cheque Truncation System).
  • Any discrepancy is flagged by CTS to the drawee bank and presenting bank, who would take redressal measures.
  • SBI is introducing Positive Pay System from 1st January 2021 to make Cheque payment secure.  
  • The cheque number of a bank in India consists of six digits as of August 2020.


  • A cheque is a negotiable instrument that contains an order to the bank, signed by the drawer to pay a certain sum of money to a specified person as per the Negotiable Instrument Act 1881.

There are three parties involved in a cheque.

  • Drawer: The person who issues the cheque or holds the account in the bank.
  • Drawee: The person who is directed to make payment against the cheque. Drawee is basically the bank on which the cheque is drawn. 
  • Payee: The person whose name is mentioned in the cheque has been issued. If the drawer has drawn the cheque in favor of self, then the drawer is the payee.

Apart from these, there are two more parties involved with a cheque.

  • Endorser: When a payee transfers his right to take the payment to another party.
  • Endorsee: The party in whose favor, the right is transferred.

Different types of Cheques

  • Bearer cheque: is a type of cheque in which the bearer is authorized to get the cheque encashed. This means the person who carries the cheque to the bank has the authority to ask the bank for encashment. This type of cheque is endorsable.
  • Order Cheque: Only the payee, whose name has been mentioned in the cheque is liable to get cash for that amount. The drawer needs to strike the “OR BEARER” mark as mentioned on the cheque so that the cheque can only be encashed to the payee. This type of cheque cannot be endorsed.
  • Crossed Cheque: The amount can only be transferred from the drawer’s account to the payee’s account. Any third party can visit the bank to submit the cheque. In this type of cheque, no cash withdrawal can be done.
  • Account Payee Cheque: The amount shall be transferred directly to the payee’s account number. This is the same as the account payee cheque but no third-party involvement is required.
  • Post-Dated Cheque: If a drawer wants the payee to apply for withdrawal or transfer of money after the present date, then he/she can fill a post-dated cheque.
  • Ante Dated Cheque: If the drawer mentions a date prior to the current date on the cheque.
  • Blank Cheque: When a cheque only has a drawer’s signature and all the other fields are left empty.
  • Self Cheque: If the drawer wishes cash for himself he can issue a cheque where in place of the Payee’s name he can write “SELF” and get encashment from the branch where he owns an account.
  • Mutilated Cheque: If the cheque is torn into two or more pieces and the relevant information is torn, the bank shall reject the cheque and declare it invalid, until the drawer confirms its validation.
  • Stale Cheque: if a payee moves to the bank to get a withdrawal for a cheque that was signed 3 months ago, the cheque shall be declared a stale cheque.


  • A cheque can only be issued against a current or savings bank account.
  • A cheque without a date shall be considered invalid.
  • Only the payee, in whose name the cheque has been issued, can encash it.
  • A cheque is only valid 3 months from the date it has been issued.
  • 9-digit MICR (Magnetic Ink Character Recognition) code is mentioned at the bottom of the cheque. This makes the clearance of cheques easier for the banks.
  • A MICR code that uniquely identifies a bank and a branch participating in an Electronic Clearance System (ECS).

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