Finance for One Time Settlement

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An NPA account can be recovered by paying the full amount outstanding in the NPA account through various resources like NPA restructuring, One-Time Settlement & selling the collaterals to completely close the account offers the recovery of an NPA account as an NPA account hinders the financial progress of the business. 

Today we are going to discuss the most common search query among borrowers who fails to repay EMIs of a loan or advance i.e. How to Recover NPA?. So, there are several NPA recovery methods to complete the NPA Recovery Process.

What is the NPA Recovery Process?

If you are a borrower and your account become NPA, then you can recover you NPA account with the help of these npa recovery methods:

1. Restructure of NPA Account:

If you are stuck in a situation where you become an NPA, you need to contact your bank and ask them to restructure your loan. However, the bank can extend the repayment period and adjust your EMIs (Equated Monthly Installments). In some cases, the bank may ask you to make a deposit to cover interest and penalties accrued on the account, making it compliant. The remaining principal balance, after settling these charges, will be redistributed over the coming years through EMIs.

2. Repaying Entire Interest & Principal:

The Reserve Bank of India (RBI) has made it clear that NPA classified accounts can only be upgraded to standard accounts by paying off overdue interest in addition to the entire principal amount. If you have multiple loan accounts with the bank, you’ll need to clear overdue interest and the total principal in each of them. 

3. One Time Settlement(OTS):

Banks provide a one-time settlement (OTS) facility to reduce bad loans from their books. Under this scheme, NPA borrowers are offered a chance to settle their outstanding dues at a reduced rate and in a lump sum. Banks periodically roll out OTS schemes for NPA borrowers. Alternatively, borrowers can approach their banks to discuss an OTS, which allows them to close their NPA account by paying a reduced amount.

4. Selling the Collateral Property: 

Clients can dispose of the collaterals with the due permission from their bank with objective to close the NPA liability.

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