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Volume IconWhat is IMPS?

Swift transfer of money between bank accounts has made all types of transactions smooth. Through IMPS, we can now transfer money within seconds. Let's get some clarity about this efficient platform

Money transfer, NEFT, online banking, banking

Introduced in 201o, Immediate Payment Service or IMPS, is -- as the name suggests -- a ‘fast payments’ system. It provides 24x7 instant domestic funds transfer facility. India was the fourth country after South Korea, South Africa and the United Kingdom to introduce it.

This facility is provided by the National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, through its existing NFS switch.

The system provides for real time transfer of funds between the remitter and beneficiary with a deferred net settlement between banks.

One can transfer money via IMPS by using various channels like internet banking, mobile banking apps, bank branches, ATMs, SMS and Interactive Voice Response System, i.e. IVRS. Besides banks, the system allows non-bank entities such as Prepaid Payment Instrument (PPI) issuers to participate and facilitate remittances from wallets to the recipient bank accounts

Presently, IMPS person-to-person (P2P) funds transfer requires the remitter to make the transfer using the Beneficiary Mobile Number and Mobile Money Identifier or MMID. Both remitter and the beneficiary need to link their mobile numbers with their respective bank accounts and get MMID, in order to send or receive funds using IMPS.

Initially, the system required both the remitter and the beneficiary to be registered for mobile banking which was inhibiting the growth. Hence, the system was upgraded to enable remittance of funds by using other parameters such as account number and IFSC code or by using bank account linked Aadhaar number.

Any entity with a valid banking or prepaid payment instrument (PPI) licence from the Reserve Bank of India is eligible to participate in IMPS.

In IMPS, a transaction is received at National Payments Corporation of India or NPCI for routing to the beneficiary bank only after the remitting bank has debited the remitting customer’s account. Therefore, the risk of a remittance being made with the remitting customer not having adequate funds is addressed.

Currently, 644 members are live on IMPS which include banks and PPIs. The per-transaction limit in IMPS, effective from January 2014, was capped at ₹2 lakh for channels other than SMS and IVRS.

The RBI, in view of the importance of the IMPS system in processing of domestic payment transactions, increased the per-transaction limit from ₹2 lakh to ₹5 lakh for channels other than SMS and IVRS in October 2021.

With RTGS becoming operational round the clock, there has been a corresponding increase in settlement cycles of IMPS, thereby reducing the credit and settlement risks. The number of monthly IMPS transactions have also jumped from 248 million to 420 million in two years.


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First Published: Mar 14 2022 | 8:45 AM IST