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Covid surge may upend drop in auto-debit payment failure

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covid-19 cases and resulting local restrictions being implemented across states is likely to lead to a pickup in auto-debit payment bounces, which had been declining over the last few months.As covid-19 wreaked havoc on the economy last fiscal, a larger number of small borrowers were unable to repay loans, resulting in a near-9 percentage point increase in auto-debit bounces in FY21, showed data from the National Payments Corp.

of India (NPCI).While there has been some recovery in the four months to March 2021, the fresh wave of covid-19 threatens to mar it.

In FY21, 38.9% of auto-debit transactions conducted through the National Automated Clearing House (NACH) failed, primarily because of insufficient funds.

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