Direct debit defaults decline in February
MUMBAI : Failed transactions on direct debit requests for retail loan repayments were almost flat month-over-month, dropping from 36.2% in January to 36.6% in February, according to data from National Payments Corp. of India.
However, it was about 8.75 percentage points lower than in June 2020, at the height of the disruption caused by covid, suggesting a recovery in collections, but has not yet reached pre-covid levels. . The bounce rate, or the percentage of failed trades by volume, was 31% and 31.5% in January and February 2020, respectively.
In terms of value, the rebound rate also remained stable month-over-month in February at 27%, down from 29% in December, but above the 25% seen before the crisis.
Data is for interbank mandates, or for transactions between a bank and a non-bank lender.
Following a Supreme Court order banning some loans from being reclassified as bad if they are not reported by Aug.31, bankers said more people were delaying their repayments. The loan moratorium ended on August 31, but the Supreme Court’s order of September 3 on maintaining the status quo on loan downgrading may have affected borrower repayment decisions.
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