In a marked improvement in collection efficiency, NACH auto debit bounce rates in May 2022 declined to 29 per cent, a near three-year low.

According to data from the National Payments Corporation of India, a little over 10.18 crore auto debit transactions amounting to Rs 94,751 crore were conducted on the NACH platform in May this year. Of this, 2.94 crore transactions worth Rs 20,811.6 crore were rejected.

This translates to a bounce rate of 28.97 per cent in volume terms and about 22 per cent in value terms.

Analysts noted that bounce rates were at a multi-year low.

“In May 2022, unsuccessful auto-debit requests (bounce rate) in terms of value on the NACH platform fell to a 38-month low at 22 per cent, which is well below the pre-Covid levels of 24-25 per cent and near the June 19 levels,” said a report by ICICI Securities.

Similarly, the bounce rate in terms of volume, too, fell to a 33-month low at 29 per cent, compared to pre-Covid levels of 30-31 per cent, it further said.

“Improving bounce rate trajectory, after a surprising rise in March 2022, suggests that slippages and credit cost will descend going forward in the fiscal year 2022-23,” it said.

The proportion of unsuccessful transactions has been dropping since June 2021 and has been in the range of 29 per cent since December 2021.

The bounce rate for auto debit transactions was at 29.87 per cent in volume terms in April this year.

Recurring payments such as EMIs and insurance premium are presented on the NACH platform for auto debit.

Most lenders and NBFCs have reported an improvement in collection efficiency in recent months as economic activities have normalised and Covid-19 cases have come down.

In its monthly update, Mahindra Finance had reported collection efficiency (CE) at 95 per cent for May 2022 in comparison to 67 per cent in May 2021. CE in May last year was affected due to Covid related lockdowns, it said, adding that the numbers were now in line with pre-Covid levels.

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