Glossary · Finance & banking
Roll rate meaning
Roll rate is the share of loans in one DPD bucket that slip into the next, worse bucket in a month. Learn the formula, a worked example and common errors.
How is roll rate calculated?
Take the accounts sitting in a bucket at one month-end cut-off. At the next cut-off, count how many have moved to the next bucket. Roll rate is that number divided by the starting count, as a percentage. So the 1 to 30 DPD roll rate tells you what share of last month's 1 to 30 accounts are now 31 to 60 DPD. Indian lenders track this for every bucket up to the 90-day NPA line, and loan collection software that ranks accounts by propensity to pay is judged largely on whether it brings early-bucket roll rates down against a control group.
Each account in a bucket has three possible outcomes by the next cut-off: it rolls forward, it stays in the same bucket (often after a part payment), or it rolls back or cures to current. Laid out as a grid of every bucket against every other bucket, this is called a roll rate matrix or flow rate matrix.
What does a roll rate calculation look like?
Illustrative numbers only. On 31 July a lender has 1,000 accounts in the 1 to 30 DPD bucket. By 31 August:
| Outcome by 31 August | Accounts | Share |
|---|---|---|
| Cured to current | 620 | 62% |
| Stayed in 1 to 30 DPD | 230 | 23% |
| Rolled to 31 to 60 DPD | 150 | 15% |
The roll rate for this bucket is 150 ÷ 1,000 = 15%. If the 31 to 60 bucket rolls at 40% and the 61 to 90 bucket at 50% in the same months, chaining them gives 15% × 40% × 50% = 3%. In this made-up book, about 3 of every 100 accounts that enter 1 to 30 DPD would reach NPA if the rates held, which is why a small change at the first bucket matters so much downstream.
Should roll rate be measured by count or by value?
Both, and labelled clearly. A count-based roll rate treats a ₹5,000 two-wheeler loan and a ₹5 lakh business loan the same. A value-based roll rate divides the outstanding balance that rolled by the balance at the start. If large tickets are rolling while small ones cure, the count figure looks healthy while the value figure warns you.
What are the common mistakes with roll rate?
- Roll rate vs cure rate. They are not opposites that add to 100%, because some accounts stay in the bucket.
- Mixing in new entries. Accounts that bounced this month and entered the bucket fresh should not be counted in the starting population. Track them separately as a bounce or entry rate.
- Shifting cut-off dates. Comparing a 30 June snapshot with a 5 August one inflates or hides the roll. Use the same cut-off rule every month.
- Different DPD counting. If one report counts from the oldest unpaid instalment and another from the latest, the buckets do not match and the roll rate is meaningless.
To work out roll-forward and cure rates for one bucket, use the collection efficiency and cure rate calculator. To prove that a new strategy actually changed the roll rate, see how to test collections changes with a control group.
Related terms
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Where this shows up in our work. AutoCollect: Accounts ranked by propensity to pay; WhatsApp links, voice agents and field visits inside contact-hour rules. Book a 30-minute working session with an engineer.
Questions
What is roll rate in collections?
Roll rate is the percentage of accounts in one days-past-due bucket that move into the next, more delinquent bucket by the following cut-off, usually month-end. A falling roll rate means more borrowers are being cured early.
What is the difference between roll forward and roll back?
Roll forward means an account has moved into a worse bucket, for example from 1 to 30 DPD to 31 to 60 DPD. Roll back means it has moved to a better bucket after paying some or all overdue instalments.
Is a lower roll rate always better?
Usually, but read it with value and stay rates. A low count roll rate can hide large balances rolling, and a falling roll rate with a rising stay rate may only delay the problem by a month.