In a significant improvement in collection efficiency, National Automated Clearing House (NACH) auto debit bounce rates declined to 29 per cent in May, which is near three year low, reported Business Line.
According to the data from the National Payments Corporation of India (NPCI), over 10.18 crore auto debit transactions amounting to ₹94,751 crore were conducted on the NACH platform in May this year. Of this, 2.94 crore transactions worth ₹20,811.6 crore were rejected.
This is equal 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 multiyear low.
“In May 2022, unsuccessful auto debit requests (bounce rate) in terms of value on the NACH platform fell to a 38month-low at 22 per cent, which is well below the pre-Covid levels of 2425 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 33month-low at 29 per cent, compared to pre-Covid levels of 3031 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 202223,” 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.
EMIs and insurance premium
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 Covid19 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.
The numbers were now in line with pre-Covid levels, it said.