The 'bounce rate' on auto-debit transactions, or auto-debits that did not clear, has remained elevated over the last few months. Between April and October 2020, the bounce rate on debit transactions via the National Automated Clearing House (NACH) on average stood at 40.4% in volume terms and 33.5% in value terms, in comparison to 29% and 23%, respectively, during the same period last year, according to data from the National Payments Corporation of India (NPCI). As the Reserve Bank of India (RBI) announced a six-month moratorium on loan repayments for borrowers between April and September this year as part of its COVID-19 regulatory package, October is the first month where all borrowers had to pay their loan instalments. The NACH debit platform, operated by NPCI, processes auto-debit transactions for bank accounts for recurring payments like loan equated-monthly-instalments (EMIs) and insurance premiums. At least 80% of the NACH debit transactions take place for loan repayments. The NPCI publishes data on the number of NACH debit "presentations", or the amount of debit transactions that are initiated against the customers’ account at the start of a month, and NACH debit "returns" which are transactions that did not complete. The bounce rate is calculated based on the proportion of returns to total presentations. The bounce rate on NACH debit transactions had been slowly rising beginning in May last year. But in the wake of the COVID-19 pandemic, the bounce rate grew to a historical high of 45.4% in volume and 38% in value terms…
