Banking · Cheque Truncation System and Positive Pay System
A retail customer uses the 'Positive Pay System' (PPS) through their mobile banking app for a high-value cheque of ₹6,00,000 issued to a contractor. The customer enters the cheque number, date, and payee name in the app but accidentally enters the amount as ₹60,000. When the contractor presents the physical cheque at their bank for clearing through the Cheque Truncation System (CTS), analyze the likely operational outcome and the responsibility of the paying bank according to PPS guidelines.
- 1The bank will pay the contractor ₹60,000 and keep the remaining ₹5,40,000 in a suspense account until the contractor files a police complaint.
- 2The PPS is only an optional suggestion and the bank is legally required to pay the cheque regardless of whether the digital details match or not.
- 3The cheque will likely be returned/rejected during the clearing process because the details provided by the issuer in the PPS (₹60,000) do not match the details on the physical cheque (₹6,00,000).✓
- 4The paying bank will automatically correct the amount in their system to match the physical cheque because the physical document always takes precedence over digital entries.
Correct answer
The cheque will likely be returned/rejected during the clearing process because the details provided by the issuer in the PPS (₹60,000) do not match the details on the physical cheque (₹6,00,000).
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