Bounce rates of auto debit transactions rise in April



In a worrying repetition of last year’s Covid-19 led economic distress, bounce rates for recurring transactions were elevated in April.

Data captured by the National Payments Corporation of India from its National Automated Clearing House (NACH) platform, too reveal that the number of unsuccessful auto debit requests in the month of April had once again begun to climb up after remaining low in March.

According to NPCI’s data, of the total of 8.54 crore auto debit transactions on the NACH platform in April, 5.63 crore were successful while 2.9 crore were returned. This reflects a return or bounce rate of 34.05 per cent in April compared to 32.76 per cent in March.

The rate of unsuccessful transactions in April is however, still lower than previous months like February and January when it was at a little over 36 per cent and the peak of 45.4 per cent in June 2020.

Banks watchful

The issue was also flagged by HDFC Bank in its fourth quarter analyst call when the management noted that bounce rates had begun to rise in April, which could be an indication of rising systemic stress.

Other banks too are remaining watchful about repayments and the Reserve Bank of India’s Restructuring 2.0 framework is expected to help small borrowers tide over the current uncertainty.

“Collection efficiency in April has been lower and the impact has been felt in SME and MSME segment and not so much in the salaried segment. Chances are the month of May would see a similar trend. However, this time around, there have not been any salary cuts or job losses so far in the organised sector,” noted Gaurav Gupta, CEO, MyLoanCare.in.

Analysts are hopeful that with limited lockdowns, the economic distress will not be as much as last year

“We estimate that the severely affected States account for about 48 per cent of retail credit and about 56 per cent of overall credit. Again, self-employed categories will bear the biggest brunt of localised lockdowns,” said a report by Emkay Global Financial Services.

Self-employed category

It expects that within retail assets, which constitutes about 31 per cent of overall credit, the self-employed category accounts for nearly a third – though the impact will largely be restricted to business loan, loan against property and MFI portfolio.

A recent SBI Ecowrap report also noted that NPCI-NACH debit return per cent reached a peak in June 2020 and has been on a declining trend since then. The per cent return (value terms) has declined to 27.5 per cent in March 2021 from the peak of 38.1 per cent in June 2020. Even the volume percentage declined to 32.8 per cent from 45.4 per cent during the same period.

“With various restrictions at State and district level imposed during April, it is yet to be seen whether it affects the recurring payments going forward,” it however said.



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