OTS: how to negotiate a one-time settlement yourself

Kartik, 42, owns a printing business in Surat. A personal loan of ₹6 lakh had been in default for 14 months. Collection calls were relentless. His CIBIL score was at 490. He couldn't pay the full amount — but he could arrange ₹2.8 lakh.

A settlement company told him they could negotiate for him — for ₹75,000 upfront. He almost paid.

Then he called SahiSujhav. He negotiated his own OTS in 3 weeks. Paid ₹2.6 lakh. No intermediary fee.

Here is exactly what he did — and what you can do.

What Is OTS (One-Time Settlement)?

OTS — One-Time Settlement — is a formal process by which a lender agrees to accept a lump-sum payment less than the total outstanding amount to close a loan account. Once OTS is completed: The lender marks the loan as "Settled" Collection activity stops You receive a settlement letter confirming no further dues CIBIL is updated from NPA/Written Off to "Settled"

OTS is offered by banks and NBFCs when they calculate that recovering a reduced amount today is better than chasing the full amount indefinitely from a borrower who genuinely cannot pay.

The RBI Framework for OTS

RBI does not mandate a specific OTS formula but provides broad guidance under its "Prudential Framework for Resolution of Stressed Assets" (2019) and individual bank OTS policies.

Key regulatory points: Banks must have board-approved OTS policies OTS should be based on genuine financial hardship assessment The settlement amount must be reasonable relative to recoverable value All OTS must be documented and audited

Practically: banks have flexibility to settle at whatever amount their credit committee approves. This is a negotiation.

Who Qualifies for OTS?

OTS is available when: Your loan account is NPA (90+ days overdue) or Written Off You can demonstrate genuine financial hardship You can arrange a lump sum (typically 35–65% of outstanding) The lender calculates that OTS is better than continuing legal recovery

You do NOT need: A settlement company A lawyer (unless the case has gone to court) Any third-party intermediary

Realistic OTS Settlement Percentages

Based on industry practice and borrower reports:

These are ranges — your actual settlement depends on how long the loan has been in default, your payment history, your hardship evidence, and the lender's current recovery targets.

The Negotiation: Step by Step

Step 1: Know Your Number Before You Call

Calculate the absolute maximum you can arrange as a lump sum. This is your ceiling — never reveal it first. Your opening offer should be 25–30% below your ceiling.

If you can arrange ₹2.5 lakh, open at ₹1.8 lakh.

Step 2: Contact the Right Department

Do NOT call general customer care. Ask for: "Loan recovery department" or "NPA resolution team" At a bank: "Credit recovery officer" or "Settlement desk" At an NBFC: "Collections manager" or "Resolution team"

If you cannot reach them by phone, write a letter addressed to the "Nodal Officer, Loan Settlement" — this goes to the right desk.

Step 3: Submit a Written Hardship Letter

This is critical — do not just negotiate verbally. Submit a letter that includes: Loan account number and current outstanding Explanation of your financial hardship (medical, job loss, business failure) Statement of your current financial position (income, other obligations) Your proposed OTS amount with justification Your ability to pay the proposed amount within 30–45 days

Step 4: The Opening Offer

Your letter and verbal offer: "I acknowledge my outstanding of ₹[X]. Due to [hardship reason], I am unable to pay the full amount. I am able to arrange ₹[opening offer] as a one-time settlement to close this account. I respectfully request your consideration."

Step 5: The Counter-Negotiation

The lender will typically counter higher. Expect 2–4 rounds of negotiation. Move slowly from your opening offer. Each round, increase by 5–10% of outstanding maximum.

Script for countering: "I understand your position. However, my financial situation genuinely limits what I can arrange. I can stretch to ₹[new amount] as my best and final offer. This is the maximum I can arrange, and I can provide this within 15 days of written confirmation."

Step 6: Get Everything in Writing Before Paying

The settlement letter must state: Loan account number Original outstanding amount Settlement amount agreed Statement that this fully settles the account That the lender will update CIBIL to "Settled" after payment That no further recovery action will be taken Lender's authorised signature and stamp

Do NOT pay before receiving this letter. Verbal settlements are not enforceable.

Step 7: Pay and Confirm CIBIL Update

Pay within the agreed timeframe (usually 15–30 days). Keep the payment receipt. Follow up after 45 days to confirm CIBIL has been updated.

HeyZ AI OTS Support

SahiSujhav's HeyZ AI generates: Your personalised hardship letter for OTS request OTS negotiation script tailored to your lender type Settlement letter review (paste your draft settlement and HeyZ AI checks it is complete and binding) Post-settlement CIBIL follow-up timeline

All free at www.sahisujhav.com. This is what settlement companies charge ₹50,000–₹1.5 lakh for.

Negotiate your own OTS with HeyZ AI support — free at www.sahisujhav.com

Kartik saved ₹75,000 in intermediary fees. You can too.

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• CIBIL settlement repair