Tag: National Automated Clearing House

Auto debit transactions: Bounce rates in August near pre-second wave levels

Banking & Finance

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Bounce rates for auto-debit transactions in August were at similar levels as March 2021 as businesses and borrowers shrugged off the impact of the second wave of the Covid-19 pandemic.

According to data from the National Payments Corporation of India from the National Automated Clearing House (NACH), the bounce rate or percentage of unsuccessful auto-debit transactions in August 2021 was 32.98 per cent.

This is the lowest since March 2021 when the bounce rate was 32.76 per cent. In all, a total of 8.76 crore auto-debit transactions were reported on the NACH platform in August, of which 5.87 crore were successful and 2.89 crore were returned or unsuccessful.

Also read: Resilient demand keeps driving India’s world-beating growth

Typically, auto-debit transactions are for recurring payments such as EMIs and insurance premiums although it does not capture intra-bank transactions. With the second wave of the pandemic leading to localised lockdowns and impacting economic activities, bounce rates had started to climb up from April 2021 after easing from December 2020.

In the last two months, as Covid cases have come down in most parts of the country and the economy has opened up again, bounce rates have started coming down again. Many lenders have reported that collection efficiencies have returned to normal and are at the pre-second wave levels.

“The collection efficiency was reported at about 97 per cent for August 2021, further improving on 95 per cent reported in July 2021 (collection efficiency in April, May and June was 72 per cent, 67 per cent, 90 per cent respectively),” Mahindra Finance had said, recently.

Also read: Latest PLFS suggests India’s labour market is reviving post-pandemic but some segments are hit

With the opening of the economy and improved mobility, it witnessed a meaningful reduction in the NPA contracts during the month as customer cash flows improved and said it expects the downward trajectory to continue in September.

Similarly, CreditAccess Grameen reported that standalone collection efficiency including arrears improved to 99 per cent in August 2021 from 97 per cent in July 2021 and 84 per cent in June 2021, indicating consistent improvement in overdue collections.

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UPI transactions hit a record high in August, but the growth pace slows, BFSI News, ET BFSI

Personal Finance

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Unified payments interface (UPI) transactions hit a new record high in volume as well as in value for the third straight month in August.

UPI saw 3.55 billion transactions worth Rs 6.39 lakh crore in August, which is a 9.6% increase in volume and 5.4% surge in value compared with July.

However, the pace of growth has slowed in August. In July UPI had notched a record 3.24 billion transactions, up 15% over June figures. UPI transactions were subdued in April and May due to Covid restrictions.

In August 2021

Transactions through Bharat Bill Pay stood at 58.88 million, worth Rs 10,307 crore in August, a growth of 15.15% in volume and 7.2% in value from July.

FASTag transactions were at 201.2 million and Rs 3,076 crore in value in August, a 4.61% rise in volume and a 3.36% surge in value compared with July.

Transactions through Immediate Payment Service were at 377.94 million in terms of volume and Rs 3.18 lakh crore in value in August, an 8.05% rise in volume and 3.03% surge in value when compared with July.

Pandemic push

Since the beginning of the year, UPI transactions have grown 54% from 2.3 billion in January.

Since its launch in 2016, the UPI crossed 1 billion transactions for the first time in October 2019, which more than doubled to over 2 billion transactions in October 2020. The growth exploded during the pandemic as more people opted for contactless payment.

However, the transactions have picked up since the beginning of the pandemic as more consumers opted for digital payment options. They had been rising steadily to top 5 trln rupees in March and then 6 trln rupees in July.

Last fiscal jump

UPI transaction volumes surged 43.2% in the first quarter of the last fiscal, 98.5% in the second quarter 104.6% in the third and 112.5% in the fourth quarter.

While IMPS volumes degrew 9.6% in Q1, they rose 26% om Q2. 40.5% in the third quarter and 42.9% in the fourth quarter.

National Automated Clearing House (NACH) volumes grew 32.8 in the first quarter, 13 in second, 0.9 in third while they degrew 10.2 in the fourth.

BBPS volumes grew 66% in Q1, 103.2 in Q2, 84.4 in Q3 and 102.7 in Q4 while National Electronic Toll Collection, the NHAI’s Fastag system logged 83.9 growth in Q1, 249.2 in Q2, 195 in Q3 and 75.3 in the fourth quarter.

On the other hand, RTGS volumes degrew 26.2 in Q1, logged 3.1 in Q2, 10.2 in third and 31.1 in the fourth quarter.

NEFT volumes degrew 3.9% in the first quarter, grew 9.8 in second, 23.2 in third, 17.8 in the fourth quarter.



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RBI’s new rules on interchange fee, 24/7 bulk clearing facility functional, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India‘s new directions on raising interchange fee and making available the facility of bulk clearing round the clock have become effective from Sunday onwards.

The RBI in June raised the interchange fee for financial transactions from Rs 15 to Rs 17, while for non-financial transactions the increase was done from Rs 5 to Rs 6. These new rates have become applicable from August 1, 2021, as per the RBI’s direction.

An interchange fee is a fee charged by banks to the merchant who processes a credit card or debit card payment.

Besides, the National Automated Clearing House (NACH) has been made available on all days of the week, effective August 1, 2021.

NACH, a bulk payment system operated by the National Payments Corporation of India (NPCI) facilitates one-to-many credit transfers such as payment of dividend, interest, salary and pension.

It also facilitates the collection of payments pertaining to electricity, gas, telephone, water, periodic instalments towards loans, investments in mutual funds and insurance premiums.

During the bi-monthly monetary policy review in June, RBI governor Shaktikanta Das had announced that in order to further enhance the convenience of customers, the NACH will be available on all days of the week.

The facility was available only when banks were open, usually between Monday to Friday. Auto-debit instructions given by the bank account holder were not processed on days the bank were closed like Sundays, bank holidays and even gazetted holidays. Further, since most companies use NACH for salary credits these also did not happen on bank holidays.

Meanwhile, ICICI Bank has revised charges for cash withdrawals from ATMs, cheque books and other financial transactions from August 1. The revised charges will be applicable for domestic savings account holders including salary accounts.



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From August 1, get your pay on bank holidays, too

Banking & Finance

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Starting August 1, you will be able to get your salaries and pensions credited over the weekend, too, with the National Automated Clearing House (NACH) becoming available on all days of the week.

RBI Governor Shaktikanta Das announced the move on Friday. “In order to further enhance customer convenience, and to leverage the 24×7 availability of RTGS, NACH which is currently available on bank working days, is proposed to be made available on all days of the week effective from August 1, 2021,” he said.

NACH is a bulk payment system operated by the NPCI and facilitates one-to-many credit transfers. Over 40.6 crore transactions (credits and debits) were presented on the NACH platform in May.

Digital drive

Amidst the rising adoption of digital payments, the move is set to benefit customers. Apart from getting salaries and pensions over weekends, customers will also be able to make payments such as EMIs and SIPs over the weekend.

Das noted that NACH has emerged a prominent mode of direct benefit transfer (DBT) to a large number of beneficiaries and has helped transfer of government subsidies on time.

At present, it is available on days banks work and auto debit transactions are not processed on holidays.

Vishwas Patel, Chairman, Payments Council of India, said it will speed up payments. “As IMPS, NEFT and RTGS are moving into real-time payments, NACH being available on all days will help employees get salaries on time, faster and even on weekends,” he said.

Jithesh PV, Vice-President and Head, Digital Banking, Federal Bank, said: “More partners such as NBFCs and products like bill payments may move to NACH as it is now available on all days making it a more convenient platform.”

“Availability of NACH on all days will further the financial inclusion objectives through DBT,” said SS Mallikarjuna Rao, MD and CEO, Punjab National Bank.

Also read: Non-banking finance cos seek easier rules for cancelling NACH mandates

 

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RBI, BFSI News, ET BFSI

Banking & Finance

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Bulk payment system, National Automated Clearing House (NACH) will be operational all days of the week effective from August 1, 2021. NACH is operated by NPCI and facilitates one-to-many credit transfer such as payment of dividend, interest, salary and pension.

RBI said, “NACH has emerged as a popular and prominent digital mode of direct benefit transfer (DBT) to large number of beneficiaries. This has helped transfer of government subsidies during the present COVID-19 in a timely and transparent manner. NACH is currently available only on the days when banks are functional. In the interest of customer convenience, and to take advantage of the availability of RTGS on all days of the year, it is proposed to make available NACH on all days of the week throughout the year, effective August 1, 2021.”

NACH has enabled large scale direct benefit transfer programmes of several government schemes to a large number of beneficiaries and helped government transfer subsidies during the Covid-19 pandemic.

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Non-banking finance cos seek easier rules for cancelling NACH mandates

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Non-banking finance companies, especially those with an asset base of less than ₹500 crore, have sought relaxation in rules for cancelling National Automated Clearing House (NACH) mandates by their customers. The Finance Industry Development Council (FIDC) has written to the National Payments Corporation of India “to provide cancellation facility through simpler means such as Whatsapp and SMS” in a secure manner.

In a letter to the NPCI Managing Director and CEO, Dilip Asbe, FIDC has said this would enable customers to cancel NACH mandates in a simple manner rather than having to access the companies’ websites to carry out such a request. NACH or “National Automated Clearing House (NACH)” for banks, financial institutions, corporates and government is a web-based solution to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature and bulk payments.

‘Best effort’ basis

It has also requested NPCI to allow small NBFCs (with asset base of less than ₹500 crore – which are categorised by the RBI as non-systemically important) to provide such a facility on a “best effort” basis and not as a mandate.

“Most of our members are small NBFCs that operate in limited geographies and provide the vital last mile credit delivery to unserved and under-served segments of the economy including agriculturists, MSME, small road transport operators,” FIDC said in the letter, adding that many of these NBFCs are very small and do not have a well developed website.

Further, many of their customers are not tech-savvy and are not comfortable with transacting on electronic platforms though they may be comfortable in using SMS or WhatsApp, it has said.

“Small NBFCs have, with great difficulty, convinced their customers to use electronic and non-cash means for EMI payments, but still the prevalence of cash repayments is significant,” FIDC said, adding that the provision of the facility for cancellation of NACH mandates is neither feasible nor effective in achieving the ultimate objective of customer empowerment.

NPCI guidelines

In a circular dated September 11, 2020, NPCI had come out with guidelines to provide customers the facility for online cancellation of NACH mandates.

“In order to faciliate online submission of customer request for mandate cancellation, all the entities that are obtaining the mandates from the customer shall provide an option to the customer to submit the stop/cancellation request through their website or any other electronic channels,” NPCI had said in a circular, noting that customers have to reach out to the company or the bank branch and submit the cancellation request in á physical form.

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