In FY21, unsuccessful auto-debit requests accounted for 38.91 percent of the total auto-debit requests, as compared to 30.3 percent in FY20
With the return of the corona epidemic, people had to face not only mental but economic crisis along with illness. The second wave of the pandemic and the undeclared lockdown have once again given rise to the problem of failure in auto-debit transactions. According to the National Automated Clearing House (NACH) data, 34.05 per cent auto-debit transactions (loan debates) failed in April as compared to 32.76 per cent in March, the lowest since February 2020.
According to the information, out of 85.4 million auto-debit transactions initiated in April, 56.3 million were successful, while 29.08 million failed. Since December, the share of unsuccessful auto-debit requests has been steadily declining. Failed auto-debit requests through the National Automated Clearing House platform are generally referred to as bounce rates. The National Automated Clearing House platform is extensively used for repayment of loans, investing in mutual funds and collecting insurance premiums.
While the April figure is not alarming, industry experts say it could rise further amid the lockdown/restrictions imposed by several states. Anil Gupta, Sector Head, ICRA “The bounce rate has increased due to the second wave of corona and looking at the current situation, it may see a further increase in May. But the positive is that the bounce rate is not as high as it was in the initial months of the first wave.
Despite the fact that the bounce rate observed during the initial months of the pandemic was gradually declining, it is higher than in the time of the first COVID. The bounce rate in January and February 2020 was around 31 per cent. In FY21, unsuccessful auto-debit requests accounted for 38.91 per cent of the total auto-debit requests, as compared to 30.3 per cent in FY20 and 23.3 per cent in FY19.
Let us tell you that there are many reasons for EMI bounce, but the most common reason is not having sufficient balance in the accounts of the customers. The high bounce rate seen last year as the pandemic ravaged the economy, leaving millions unemployed. Further, loan repayment was put on hold for six months which ended on August 31, 2020.