Failed auto-debits reduce in December, signalling higher personal income

The debit bounce rate for December 2021, which is the percentage of auto-debit payments that failed, stood at 24.4% by value, the lowest since the pandemic began in March 2020, according to a news item in The Economic Times. This appears to be a sign of improved ability of individuals to pay back their loans. A declining trend in bounce rates indicates reduction in stress levels in the system and improvement in collection rates affected due to lockdown, the paper wrote. 
Data from the National Automated Clearing House (NACH), which clears interbank transactions, show that the bounce rates fell to a 20-month low, nearly 80 basis points over November. Among major banks, ICICI Bank posted the lowest bounce rate and IndusInd Bank had the highest, data from National Payments Corporation of India showed, according to paper. Of course, despite the improving trend, the current bounce rates by value are nearly 300-400 basis points higher than pre-Covid levels. 
In terms of value, the bounce rate on auto-debit requests stood at 25.16% in November slightly worse than 24.83% in October. In terms of volume, bounce rates were at 30% in December and 31.2% in November. 
Lenders (banks and non-banking financial companies), however, have little to cheer since a third Covid wave has started, leading to curbs on activities and movements. This can affect business transactions and hamper the ability of individuals to meet auto-debits.



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Changes in Our Business Model
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Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
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