OTS — One Time Settlement
A negotiated agreement where a lender accepts a lump sum less than the total outstanding dues to close a loan account.
OTS is available for NPA accounts when the borrower has the capacity to pay a reduced amount but cannot service the full outstanding. The lender agrees because the settlement amount is typically higher than what they would recover through asset auction after costs.
The OTS amount is negotiated and requires board-level approval at most banks. The account is then marked "Settled" on CIBIL — which is negative but better than "Written Off". OTS negotiation is a specialised skill — having a finance expert on your side significantly improves the outcome and reduces the settlement amount.
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