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Year-end pressure hits fund transfers via IMPS, UPI in millions

Several customers could not transfer funds instantly in the first two days of the new financial year as the core banking systems at some banks failed to process IMPS (Immediate Payment Service) or UPI (Unified Payment Interface) transactions.

Bank systems were clogged due to year-end system maintenance. Transactions were delayed for more than 24 hours, which otherwise would have been possible in a few seconds. Customers of top banks with large retail interfaces are said to have suffered the most.

This triggered a flood of complaints on Twitter even as National Payments Corporation of India (NPCI), an umbrella organisation of retail payments and settlements, issued a clarification. The latest outage was restricted to a few large banks and highlights the risks of 24×7 payments systems with more transactions moving online. An estimated 4.5 lakh transactions have been affected, say market experts.

“For both IMPS and UPI to function well, availability of the banks’ Core Banking Systems is mandatory,” said Dillip Asbe, MD and CEO at NPCI. “However, they were not functioning in full strength due to the financial year-end processing, which is carried out on April 1 every year. We acknowledged that on social media.”

On April 1, IMPS and UPI are estimated to have reported about 9.7 and 76 million transactions. The very next day, those numbers inched up to 10.8 million and 90 million. In those two days, volumes were broadly 5-15 percent lower than then an average usual day.

The financial year end closing had led to some UPI and IMPS transaction failures at a few banks,” NPCI tweeted on April 2 post noon. “We have observed that most of these bank systems are back to normal since last evening. Customers may avail uninterrupted IMPS and UPI services.”

Bankers said that the failure rate for transactions was much higher than normal on April 1 as the down time for core banking systems for some banks extended as they updated for the new financial year.

“It impacted some banks for a long period. If the core banking for bank ‘A’ does not respond it means transactions to and from that bank do not go through,” said a senior bank executive.

It seems there were more than one bank which was impacted but it was not a widespread systemic issue,” said the person.

To be sure, the estimated failure of transactions at 4.5 lakh were less than 4.5% of the average 10 to 12 million daily transactions managed by the NPCI. However, it is much higher than the less than 0.50% failure rates the system faces in normal courses.

“But don’t forget UPI and IMPS are 24×7 systems; so these issues can occur sometimes,” said another senior bank executive.

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