The bounce rates tracked by NPCI’s e-NACH platform were registered 33.0% and 26.8% respectively in terms of volume and value for the month of August. In July, these figures were 33.2% and 27.4% in terms of volume and value. This was down from highs of 35.9% and 30.7% in volume and value recorded in the month of May.
“The bounce rate in value terms for August is the lowest since the start of the pandemic, so this is a very encouraging sign. This indicates that the recovery is gaining momentum and a lot of slippage that we have seen for banks in the April-June quarter is likely to recover, though the major uncertainty remains the third wave,” said Suresh Ganapathy, associate Director said, Macquarie Capital.
These bounce rates were even better (lower) than the levels seen during January-March’21 which, according to Ganpati, was the best quarter of the previous year in terms of recovery for the economy and overall performance for the financials. .
However, bounce rates still remain above pre-Covid levels. An analysis by Macquarie shows that pre-Covid (2017-2019), the bounce rate for the month of August has averaged around 24% in terms of volume and 20% in terms of value.
The current bounce rate in value terms is still around 700-800 basis points higher than the pre-covid levels, indicating that there is still some tension in the system and the repayment behavior has not fully returned to pre-covid levels Is.
On the upside, most banks have indicated an improvement in the trend of collections in the retail trading segments since July.
Several banks have said that they have already corrected around 30-40% slippage seen in the June quarter.
“The major slippage was especially in the retail segment i.e. segments like gold loan, microfinance, commercial vehicle loan where collections were affected due to the lockdown as well as health of employees/collection workforce,” Ganapathy said. “HDFC Bank has already said that NPA The recovery in this quarter could surprise positives, especially in the rural and SME sector.”