Inter-Bank Mobile Payment Service

Inter-Bank Mobile Payment Service

Did you know you could use your mobile phone to make instant payments for your rail tickets, credit card and DTK mobile recharges? Or transfer funds to your friend? All of this can be done just through an SMS or an app. This retail fund-transfer system, called the inter-bank mobile payments service, works in real time and is available 24x7. Here’s how.

What is IMPS?

IMPS offers an instant, 24X7, interbank electronic fund transfer service through mobile phones. There are two types of IMPS services: A person-to-person (P2P) service and a person-to-merchant (P2M) service. While the P2P service was launched some 18 months ago, P2M service was made available only recently.

How to start A P2P or P2M service

Register your mobile number with your bank. Get a seven-digit Mobile Money Identifier, or MMID, number. This number is used to identify your bank and is linked to your account number. The combination of mobile number and MMID is unique for a particular account, and the customer can link the same mobile number with multiple accounts in the same bank, and get separate MMID for each account. After this, get a Mobile Banking PIN, or M-PIN, which is a password to be used during transactions for authentication and security. Download mobile banking application or use the SMS facility provide M by the bank to make a payment.

How to send receive funds for P2P transactions

To send money, initiate an IMPS transaction using the mobile app or SMS. You need to enter the beneficiary’s mobile number and MMID, amount and M-PIN for initiating a transaction. You will then receive a confirmation SMS for the transaction. To receive money, share your mobile number and MMID with the sender. The sender then initiates the above-mentioned steps. And you get an SMS confirmation for the money received.

How does the P2M service work?

There are two ways in which P2M transactions can be performed: customer-initiated transactions (P2M PUSH) and merchant-initiated transactions (P2M PULL). P2Mpush transactions can be used for paying insurance premium, mobile/DTK recharge, credit card fee, utility bills, over-the-counter payments, and face-to-face payments such as pizza delivery couriers and cabs.

For P2M PUSH, a customer initiates transaction through the mobile banking app or SMS facility provided by the bank. For P2M PULL, the transaction is initiated through the website of the merchant Plus you need to get a one-time password (OTP) from your bank.

How credit rating agencies work

You may be looking to invest in fixed deposits or bonds with the highest interest rates, but do you know how safe they are?

Given the many investment options available, you should look to minimise risk while pursuing high returns. This is where rating agencies such as CRISIL, CARE and ICRA come to your rescue. They assess the credit and default risk on these products and tell you how safe they are.

Investment grade ratings

The rating scale for deposits and bonds range from ‘very high safety’ denoted by the symbol AAA to potential ‘default’ grade which is represented by a D symbol. According to the global rating agency Standard & Poor’s, any bond with a rating below BBB (which denotes moderate safety) is considered to be non-investment grade, practically a ‘junk’ rating. However, there may be minor variations in rating symbols between agencies.  CRISIL-and ICRA-rated instruments with ratings lower than an A grade are below investment grade.

In addition to rating, rating agencies also provide an outlook on the rating. Rating outlook indicates the likely direction of change in the company’s rating. For instance, a fixed deposit with BBB rating and a negative outlook may mean a higher probability of downgrade to a BB grade. This can be as risky as a BB-rated deposit, implies moderate default risk. Hence, it is important to understand the rating outlook on the instrument you intend to invest in. It is prudent to avoid instruments below an A-grade rating, considering the safety of the interest and principal invested.

How they rate

Knowing the methodology will help you appreciate these ratings better. Rating agencies analyse the various risks associated with a business while rating deposits and bonds.

Some risks may be inherent to the industry the company operates in. For instance, while evaluating a commercial vehicle NBFC, rating agencies analyse the level of economic activity and trend in freight rates. But even amid an adverse industry trend, there may be companies with a strong footing and sound fundamentals. Hence, rating agencies look at company-specific parameters to assess the relative standing of the company within an industry too.

For instance, while assessing a car loan company, a rating agency may look into the credit profile of the promoter, shareholding pattern and promoter’s track record. These can influence the company’s profitability and ability to mobilise funds. Parentage matters too, as companies backed by a strong parent may even tide over the most difficult times. Rating agencies also consider aspects such as size of the franchise and capability to grow in their market in deciding on a rating.

The parameters used to measure risks also vary with the industry. For instance, while evaluating a company which manufactures fertiliser, the distribution and pricing of which is controlled by government, these agencies look into the risks associated with any adverse policy move by the government. Given the dependence on the government for subsidy, companies better placed to withstand delayed subsidy payments and those which have diversified into non-subsidy businesses will be viewed favourably.

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