RBI to bring in framework for retail digital payments in offline mode

The central bank has enhanced the transaction limit under IMPS from Rs 2 lakh to Rs 5 lakh

The Reserve Bank of India (RBI) on Friday announced that it will soon introduce a new framework for retail digital payments in offline mode across the country. This will further the reach and adoption of digital payments in areas with low internet connectivity. The RBI also raised the  daily transaction limit for immediate payment service (IMPS), from Rs 2 lakh to Rs 5 lakh.
 
It had announced its intention of doing pilot tests on transfers without internet in the developmental and regulatory statement dated August 6, 2020. After that, three pilots were successfully conducted under the scheme in different parts of the country during September 2020-June 2021. It involved small-value transactions covering a volume of 241,000 for a value of Rs 1.16 crore.
 
The step on IMPS, market participants say, will further boost the already burgeoning digital payments ecosystem in the country.
 
“In view of the importance of the IMPS system and for enhanced consumer convenience, it is proposed to increase the per transaction limit from Rs 2 lakh to Rs 5 lakh,” RBI Governor Shaktikanta Das said in his statement. 
 
The payments industry is jubilant over the RBI’s decision to raise the per transaction limit for IMPS transactions. It is of the opinion that it will, particularly, open new opportunities in the B2B payments space.
 
“This will lead to further increase in digital payments and provide an additional facility to customers for making digital payments beyond Rs 2 lakh,” the RBI said.
 
“With RTGS now operational round the clock, there has been a corresponding increase in settlement cycles of IMPS, thereby reducing the credit and settlement risks,” the RBI further said.
 
IMPS is a payment platform that offers instant domestic funds transfer facility 24x7 through various channels such as internet banking, mobile banking apps, bank branches, ATMs, SMSes, and IVRS (interactive voice response).

The IMPS facility is provided by the National Payments Corporation of India (NPCI), the umbrella entity for digital payments in the country, through its existing national financial switch (NFS).

In this calendar year so far, IMPS has processed more than 3 billion transactions worth around Rs 30 trillion.
 
“It is a fantastic move by the RBI. Now, transactions above Rs 2 lakh, which were moving to other platforms such as NEFT and RTGS, will take place on the IMPS platform. It will not only be beneficial for the B2B payments but also for other payments,” said Vishwas Patel, chairman, Payments Council of India.
 
According to Sandeep Srinivasa, co-founder, RedCarpet, the increase in the limit for IMPS transactions was long overdue.
 
He added, “But, essentially, what we are seeing is a gradual sanitisation of limits by the RBI for various payment platforms. The regulator is realising that even for intra remittances, a larger limit will hugely benefit the users. Not only B2B payments space but P2P (peer to peer) payments will also benefit from this. And, to some extent, RBI’s NEFT and RTGS may get impacted.”
 
Back in April, the RBI permitted full-KYC prepaid payments instruments (PPIs) to hold double the outstanding balance they can currently hold — from Rs 1 lakh to Rs 2 lakh. It had also doubled the maximum balance a customer can hold at the end of the day in a payments bank to Rs 2 lakh.