One-Time Settlement (OTS) is the most widely utilized resolution mechanism across Indian public and private sector banks for non-performing retail loans.
How Does the OTS Concession Matrix Work? Every bank maintains an internal delegation of financial powers (DOFP) determining how much waiver can be approved for different delinquency buckets: - **Penal Charges & Late Fees**: Usually the first to be fully waived in genuine hardship cases. - **Accumulated Interest**: Subject to significant waiver based on account age and recoverable collateral. - **Principal Amount**: Concessions on principal require higher approval levels (e.g. Zonal Committee or General Manager level) and stringent proof of genuine inability to repay.
Checklist Before Accepting an OTS 1. **Verify Letter Authenticity**: Cross-verify the OTS settlement letter by visiting the lending branch or checking through the bank’s official customer service channel. 2. **Strict Adherence to Payment Deadlines**: Settlement letters carry a strict expiration date. Paying even one day late can void the settlement terms and reactivate the entire original debt balance. 3. **Collect the Formal NDC**: Always follow up to obtain the final No Dues Certificate and verify that the loan status is updated in credit bureaus after 45-60 days.
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