• Welcome to NPA Consultants Pvt. Ltd.
  • +919892855900
  • info@npaconsultant.in

Blog List


What is OTS finance?

Posted Date: 17-12-2022 Posted By: user

When banks and financial institutions lend money, they do it with the intention of recovering the amount. But, sometimes, the borrower is incapable of generating adequate resources.  As a result, the loan goes into the state of Non-Payment Assets or NPA. In the last few decades, a lot of work has been done to control the NPA in India.

Financial institutions and banks work towards settling non-performing assets according to RBI’s guidelines. In that process, they are supposed to negotiate and settle outstanding loans based on the value of the assets mortgaged by the borrower.

There is a term OTS very popular in NPA management. The meaning of OTS is a one-time settlement to pay the dues. OTS Finance or OTS Funding for a loan can be availed of either in part or fully based on the requirement of the borrower. Other considerations in this regard are the value of collaterals and the cash flow of the business. There are different settlement arrangements plans for NPA are different by industry.

The OTS scheme is offered by all banks, but all borrowers are not eligible. Banks exercise discretion while offering money to settle the account. Sometimes, financial institutions may deny a borrower’s request for OTS. It happens when they believe that they will be able to recover the total amount (principal and interest components). If the value of mortgaged assets falls short of the amount owed or the financial institution believes that the business will be unable to generate adequate revenues to repay the loan, then it may offer an OTS offer.

One Time Settlement Finance (OTS) - All you need to know

This settlement is preceded by forensic audits so that nothing is questionable, and all documents are in place.

One Time Settlement Funding (OTS) can address many concerns related to unpaid loans, for example, litigations, undesirable costs and other relevant challenges. Financial institutions that assist the process leverage the relationship with banks so that they can discuss and negotiate the terms and conditions to settle the account.

The firms do not just assist with funding requirements, but they can also help borrowers to monetize their assets and improve the cash flow of their business. It reduces the debt burden. OTS has been a good method of NPA settlement.

It is essential to consult right financial consulting option for debt transactions including asset funding or OTS. The company should have a deep domain experience in complex debt transactions.