India’s financial ecosystem heavily relies on three primary electronic funds transfer systems: National Electronic Funds Transfer (NEFT), Real-Time Gross Settlement (RTGS), and Immediate Payment Service (IMPS). These systems, while facilitating billions of transactions each year, have occasionally faced operational snags that impact both businesses and individual users.
Overview of Transaction Volumes
NEFT, RTGS, and IMPS are integral to India’s payment infrastructure, handling massive volumes of transactions annually. As of 2023, NEFT recorded over 30 billion transactions, with a value exceeding ₹400 trillion. RTGS, used primarily for high-value transactions, processed approximately ₹1,500 trillion across 170 million transactions. IMPS, a more immediate and consumer-focused system, processed over 4 billion transactions amounting to ₹40 trillion.
Frequent Snags and Their Impact
Despite their critical role, these systems have encountered frequent snags that disrupt their operations:
- System Downtime and Maintenance: NEFT and RTGS often undergo maintenance, leading to planned outages. However, unplanned downtimes due to technical issues or cyber-attacks can cause significant disruptions. For instance, the RTGS system faced multiple downtimes in 2023 due to software glitches, leading to delays in high-value transactions.
- Network Congestion: With the growing volume of digital transactions, especially during peak periods like the festive seasons, network congestion has become a recurring issue. IMPS, in particular, has faced bottlenecks during high-traffic periods, leading to delays in real-time payments, which frustrates consumers and affects business operations.
- Security Concerns: As these systems evolve, they become more vulnerable to cyber threats. There have been instances where cyber-attacks have compromised the security of transactions, particularly in RTGS, which handles large sums of money.
- Inter-Bank Coordination: Sometimes, issues arise due to lack of coordination between banks, particularly when one bank’s system is down or during the reconciliation process, causing delays in crediting funds to beneficiaries.
- Technical Glitches: All three systems have, at times, faced technical glitches, whether in the form of delayed settlements in NEFT or failed transactions in IMPS. Such glitches are particularly challenging because they erode user trust and lead to financial losses for businesses dependent on timely payments.
Efforts to Mitigate Snags
The Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) have been proactive in addressing these issues. Initiatives include upgrading infrastructure, enhancing cybersecurity protocols, and improving coordination between banks. The introduction of 24×7 availability for NEFT and RTGS was a significant step forward, yet the system still struggles with unexpected outages.
