Money & Banking

Auto debit transactions: Bounce rates in August near pre-second wave levels

Surabhi Mumbai | Updated on September 15, 2021

In all, a total of 8.76 crore auto-debit transactions were reported on the NACH platform in August

Bounce rates for auto-debit transactions in August were at similar levels as March 2021 as businesses and borrowers shrugged off the impact of the second wave of the Covid-19 pandemic.

According to data from the National Payments Corporation of India from the National Automated Clearing House (NACH), the bounce rate or percentage of unsuccessful auto-debit transactions in August 2021 was 32.98 per cent.

This is the lowest since March 2021 when the bounce rate was 32.76 per cent. In all, a total of 8.76 crore auto-debit transactions were reported on the NACH platform in August, of which 5.87 crore were successful and 2.89 crore were returned or unsuccessful.

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Typically, auto-debit transactions are for recurring payments such as EMIs and insurance premiums although it does not capture intra-bank transactions. With the second wave of the pandemic leading to localised lockdowns and impacting economic activities, bounce rates had started to climb up from April 2021 after easing from December 2020.

In the last two months, as Covid cases have come down in most parts of the country and the economy has opened up again, bounce rates have started coming down again. Many lenders have reported that collection efficiencies have returned to normal and are at the pre-second wave levels.

“The collection efficiency was reported at about 97 per cent for August 2021, further improving on 95 per cent reported in July 2021 (collection efficiency in April, May and June was 72 per cent, 67 per cent, 90 per cent respectively),” Mahindra Finance had said, recently.

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With the opening of the economy and improved mobility, it witnessed a meaningful reduction in the NPA contracts during the month as customer cash flows improved and said it expects the downward trajectory to continue in September.

Similarly, CreditAccess Grameen reported that standalone collection efficiency including arrears improved to 99 per cent in August 2021 from 97 per cent in July 2021 and 84 per cent in June 2021, indicating consistent improvement in overdue collections.

Published on September 15, 2021

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