OTS Scheme For Loan Settlement 2024: The OTS scheme is a comprehensive settlement scheme that has become important during the period of covid pandemic. Under this OTS Scheme For Loan Settlement, if a borrower fails to repay the loan with the bank, he can get a rebate of 25-85%. This OTS scheme has played an important role during the time of covid -19 pandemic. During that period many people lost their jobs and almost the majority of businesses were facing the loss in their respective sectors.
If someone does not repay the bank loan then the credit score of the customer will also be downgraded. To avoid this, OTS is a helpful opportunity for NPA borrowers. OTS amount should be paid within 6 months from the date of approval of OTS, with 25% upfront payment and the remaining amount within 6 months without any interest. If the money is paid within a year, then interest will have to be paid at the base rate from the sixth month to one year. However, in exceptional cases, the payment of OTS can be extended up to 2 years within the interest.
OTS Scheme for Bank Loans: Punjab National Bank OTS scheme
Punjab National Bank launched a special OTS scheme in July 2021 for its customers who could not repay loans for NPA accounts ranging from Rs 50,000 to Rs 5 crore due to the pandemic. You can get a discount of up to 25-80%. The OTS amount for NPA will range from Rs 50 lakh to Rs 5 crore depending on the secured and unsecured portion.
The scheme will remain commercial till March 31, 2022, and will cover NPA accounts till March 31, 2021. Agricultural accounts worth more than Rs 10 lakh will also be included. Settlement of 70% of the outstanding educational limit for eligible situated education loan accounts up to Rs 7.50 lakh; Additionally, 85% of the balance of all other eligible substandard accounts will be compromised. All other important information related to the PNB OTS Scheme can be found here: click here
OTS Scheme for Bank Loans: SBI OTS scheme
Earlier, in 2020, in November, SBI launched the ‘RIN Resolution 2020-21’ OTS scheme, which was aimed at NPA borrowers who could not repay the loan amount. The bank said, “The OTS scheme for recovery of NPA and AUCA accounts is being launched this financial year to enhance our recovery efforts for NPAs and AUCAs whose outstanding amount is above Rs 20 lakh and Rs 50 lakh respectively.” is more. crore and which have been classified as D1, D2, D3, loss or AUCA as of 31.03.2020, and which accounts have been reversed from AUCA as of 31.03.2020.
How to apply for the OTS Scheme For Loan Settlement?
To apply for the online OTS scheme, the NPA customer must ensure that his/her mobile number is registered with the bank for SMS banking services. This is important because the bank will send OTP to the registered mobile number. There will be a separate portal for OTS applications on the bank’s website. On that page, the NPA borrower has to fill in the applicant’s name, account number, country, email ID, balance, OTS offer, captcha code, etc. After filling the page, another window will present the path to the OTS application. You can also track OTS application status online on the same page.
For example, customers of Punjab National Bank can apply for the OTS scheme here.
However, non-performing asset (NPA) borrowers with export/import accounts will have to approach the bank branch in person. The Bank will accept or reject the presentation as per the scheme and guidelines issued by the Bank.
What is the importance of OTS for MSE sectors?
OTS Scheme for Bank Loans: One Time Settlement (OTS), a very old scheme registered by RBI, is very important for the MSE sector in India, which is one of the largest employment providers in the country, and to strengthen the link of the economy with the agriculture sector. As per the priority sector instructions issued by RBI, only micro and small enterprise sectors are eligible to be included in the priority sector. The contribution of MSEs to GDP and exports is significant, however, the sector remains under pressure.
The pandemic posed another hurdle for the sector, forcing it to halt its activities and generate income for almost a year. Many MSE owners had earlier taken loans, which they could not repay due to huge losses. Therefore, the OTS scheme was very helpful for them. South Indian Bank said in an official note, “In case of loans given to Micro and Small Enterprises (MSEs), employees have been permitted to withdraw part or whole of the principal amount irrespective of the amount printed, subject to approval. The MSE sector in the NPA account can be closed by OTS, wherein the bank offers some discount on principal/interest or both to the lender, provided the account is closed within the specified time.