Bounce rates decline further in October

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Incidents of bounces in auto-debit payments have come down further in October, validating lenders’ claims of improvement in recoveries, the Business Standard has reported.

According to data available with National Automated Clearing House (NACH), in October, 27 million transactions failed. This is 31.24% of the total 86.6 million transactions initiated. The number of successful transactions is 59.52 million.

In value terms, it was the lowest since January last year as only 24.83% of transactions declined in October, the report said.

In the previous month of September, bounce rates were 31.7% in volume terms and 25.4% in value terms.

Bounce rates decline by 50-60 bps by volume

The Business Standard quoted Suresh Ganapathy, associate director, Macquarie Capital, as saying that the decline in bounce rates says that collection recovery as witnessed in the second quarter of FY22 continues for major banks.

These bounce rates were at similar levels seen during pre-Covid months of January and February of 2020 and by value, he added.

On a month-on-month basis, bounce rates have fallen 50-60 bps by volume/value, ,” he added.

The National Payments Corporation of India operates NACH, which is a bulk payment system.

Anil Gupta, vice president-financial sector ratings, ICRA, is quoted in the report as saying that bounce rates touching pre-Coivd level is a good trend and they should go down further.

He, however, cautioned that many accounts have been restructured and about 50-60% of restructured accounts are under moratorium. Once they come out of moratorium, the bounce rates may start inching up.

Bounce rates started coming down from December 2020. April saw the trend reversing as bounce rates increased in the wake of the second wave of Covid-19,

In April 2019, the bounce rate stood at 27.7% and 22.2% . Experts said these figures indicate that bounce rates were high even before the pandemic struck due to slowdown.