According to National Payments Corporation of India data, auto-debit transaction defaults fell to 36.6% of total volumes in February. This is 8.75 percentage points lower than the level recorded in June, the highest level in 2020.
Auto-debit default occurs when the payment preset for the future date from the bank account fails due to insufficient funds at the time of the transfer. Typically, auto-debits are used to repay the loan, while regular bills and some salaries are also paid this way. The rise of such failures last year is a sign of how much less money individuals and businesses have had since our economy froze, workers were laid off and a large number of people lost their income. Although last month’s sinking was the worst, a third of pre-programmed transactions did not happen. Although lockdown barriers have been lifted in most parts of India, it represents a continuing pain across the country. After all, these are not discretionary transactions, commitments. Many of us have not been able to refill our empty accounts badly for the entire demand.