22 Mar , 2021 By : kanchan Joshi
MUMBAI: Retail loan repayments are gradually getting more regular, as is evident from fewer defaults in auto-debit transactions in February.
Data from the National Payments Corp. of India (NPCI) showed that 36.6% of all auto-debit transactions by volume failed in February, about 8.75 percentage points lower than what was seen in June last year (the highest in 2020). Bounce rate in February was, however, still higher than the pre-covid run rate.
Bounce rate, or the percentage of failed transactions by volume, was at 31% and 31.5% in January and February 2020, respectively. By value, the pre-covid bounce rate was around 25%. In subsequent months, repayment failures surged amid job losses. In value terms, it was at 27% in February, down from 29% in December. This data on the National Automated Clearing House platform is for inter-bank mandates or those between a bank and a non-bank lender.
The recovery comes at a time when a judicial order has barred lenders from classifying certain loans as bad if not declared by 31 August. Bankers had earlier said this led more people to delay their repayments, as they awaited the Supreme Court's judgment. The formal moratorium ended on 31 August, but the apex court’s 3 September order for status quo in downgrading of loans is being seen as a moratorium by many, possibly affecting their repayment decisions.
"Looking at the check bounce trends, these have also been improving month-on-month since September, when we started measuring it," Jimmy Tata, head of credit and market risk, HDFC Bank, told analysts on 16 January.
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