One-Time Settlement (OTS) Negotiation

One-Time Settlement (OTS) Negotiation

One-Time Settlement (OTS) is a financial arrangement between a borrower and a lender (typically a bank or NBFC) where the borrower pays a lump-sum amount less than the total outstanding debt to fully close the loan. The lender, in turn, waives the remaining dues — including part of the principal, interest, or penalties.

In India, OTS is primarily used for Non-Performing Assets (NPAs) — loans overdue by 90 days or more — and serves as an effective mechanism for both borrowers and banks to resolve distressed loans efficiently.

Regulatory Framework

OTS is governed by Reserve Bank of India (RBI) guidelines that ensure:

Transparency and fairness in settlements.
Board-approved policies for each bank.
Structured documentation and approval hierarchy.
OTS schemes generally exclude fraudulent and wilful default cases.

When to Opt for OTS

Borrowers can propose an OTS when:

The loan account has become an NPA.
Regular repayment or restructuring isn’t possible.
Legal recovery (SARFAESI, DRT, etc.) has begun.
Genuine financial hardship exists due to job loss, illness, or business losses.

Key Steps in OTS Negotiation

Step 1: Assess Financial Capacity

Review income, expenses, and liabilities.
Determine a realistic lump-sum offer (often 50–80% of principal).

Step 2: Gather Evidence of Hardship

Provide supporting documents such as:
- Income tax returns showing loss
- Bank statements
- Medical bills or business loss proofs

Step 3: Approach the Right Department

Contact the bank’s Loan Recovery or Debt Resolution division.
Avoid informal communication—submit a formal written proposal.

Step 4: Submit the OTS Proposal

Include:

Total dues
Proposed settlement amount
Payment source and timeline
Request for interest/penalty waiver
Statement of genuine hardship

Step 5: Negotiate

Be prepared for counter-offers.
Emphasize mutual benefit: quick recovery for the bank and relief for you.
Maintain professionalism and transparency.

Step 6: Obtain Written Approval

Ensure the OTS sanction letter clearly mentions:

Final settlement amount
Payment schedule
Waivers granted
Confirmation of “full and final settlement”

Step 7: Make Payment and Close Account

Pay on or before the agreed date.
Obtain a No Dues Certificate (NDC) and Settlement Letter.
Confirm closure in the bank’s records.

Post-Settlement: Credit Bureau Update

Verify that your credit report reflects “Settled” or “Closed”, not “Written Off”.
Settlement remains on record for up to 7 years but is preferable to ongoing default.

Common Mistakes to Avoid

Submitting incomplete documents.
Accepting first offers without negotiation.
Paying before receiving written approval.
Missing payment deadlines.
Ignoring the credit report update.

Benefits of OTS

Provides financial relief and prevents legal escalation.
Allows faster debt resolution and account closure.
Helps restore trust with the lender.
Facilitates a fresh financial start for the borrower.

Negotiation Tips

Stay honest and transparent about your situation.
Offer a realistic, quick-pay amount—it shows seriousness.
Request full waiver of interest and penalties first.
For large or complex cases, engage a financial advisor or lawyer.

Ajay Gautam Associates: One-Time Settlement (OTS) Negotiation

Ajay Gautam Associates is a professional consultancy specializing in financial dispute resolution, distressed asset management, and debt settlement solutions. Our team assists individuals, MSMEs, and corporate borrowers in achieving fair and effective One-Time Settlements (OTS) with banks and NBFCs across India.

With deep expertise in RBI regulations, banking law, and negotiation strategy, we help clients navigate complex financial situations, ensuring transparent and legally compliant settlements that protect their long-term financial interests.

Our OTS Negotiation Services

We represent borrowers in negotiating and finalizing OTS agreements with banks and financial institutions. Our services include:

Account Review and Financial Assessment
- Analyze outstanding dues, loan classification (SMA/NPA), and recovery notices.
- Evaluate client’s repayment capacity and asset position.
OTS Strategy Formulation
- Determine realistic settlement ranges (typically 40–80% of outstanding).
- Assess the lender’s recovery potential and negotiation leverage.
Proposal Preparation and Submission
- Draft and submit formal OTS proposal letters compliant with RBI and bank-specific policies.
- Include evidence of financial hardship and repayment capability.
Negotiation and Representation
- Liaise directly with bank recovery or legal departments.
- Negotiate waiver of interest, penalties, and legal charges.
- Ensure settlement amount and payment schedule are achievable and documented.
Documentation and Closure
- Secure written OTS sanction letters.
- Assist in completing payment formalities.
- Obtain No Dues Certificate (NDC) and ensure CIBIL/credit bureau update to “Settled” or “Closed.”

Benefits of Engaging Ajay Gautam Associates

Expert negotiation with public and private sector banks.
Legally sound documentation and RBI-compliant processes.
Significant savings on total loan liability.
Reduced legal and recovery pressure.
Confidential and professional representation.

RBI Compliance and Ethical Standards

We strictly follow RBI OTS guidelines, ensuring that all negotiations are:

Transparent and properly documented.
Approved through formal channels.
Free from fraud or willful default cases.

Our focus is on fair debt resolution that benefits both the borrower and the financial institution.

The OTS Process Timeline

Typically, an OTS negotiation with our assistance takes 2–4 weeks, depending on:

Lender’s internal approval process.
Size and nature of the outstanding account.
Client’s readiness to make payment.

At Ajay Gautam Associates, we combine financial acumen with practical negotiation experience to deliver effective results. We’ve helped numerous clients across sectors — from traders and small business owners to medium enterprises — achieve settlements that restore financial stability and peace of mind.

Ajay Gautam Associates This firm offers legal consultancy and advisory services, including expertise in the SARFAESI Act and the Recovery of Debts and Bankruptcy Act, and specializes in facilitating One-Time Settlements and representing clients before the DRT & DRAT.