One-Time Settlement (OTS) Explained: How Borrowers Can Legally Close Loans in India

One-Time Settlement (OTS) Explained: How Borrowers Can Legally Close Loans in India

When loan EMIs become unmanageable, many borrowers believe default is the end of the road. In reality, Indian banking laws allow a powerful option called One-Time Settlement (OTS), which helps borrowers legally close loans for a reduced amount.

OTS is a recognised practice followed by banks and NBFCs in India and is commonly used for stressed or non-performing loan accounts.
Source: RBI – Fair Practices Code & Banking Norms
👉 https://www.rbi.org.in

This blog explains:
✔ What One-Time Settlement is
✔ Who is eligible for OTS
✔ How OTS works in India
✔ Its impact on CIBIL score
✔ How Facile Quick Settlement LLP helps borrowers settle loans legally

What Is One-Time Settlement (OTS)?

One-Time Settlement (OTS) is a negotiated agreement between the borrower and the lender where the borrower pays a one-time reduced amount instead of the full outstanding loan. Once paid, the loan account is marked as “settled” or “closed” as per agreed terms.

Banks and NBFCs use OTS mainly to recover dues from stressed accounts rather than initiating long legal proceedings.
Source: BankBazaar – One-Time Settlement Guide
👉 https://www.bankbazaar.com/personal-loan/one-time-settlement.html

Who Is Eligible for One-Time Settlement?

Borrowers may be considered for OTS if they are facing genuine financial hardship such as:

• Job loss or salary reduction

• Business losses

• Medical emergencies

• Long-term EMI default

Eligibility depends on lender policy, account status, and repayment capacity.
Source: Paisabazaar – Loan Settlement Explained
👉 https://www.paisabazaar.com/loan-settlement/

How One-Time Settlement Works in India

The OTS process generally includes:

1. Assessment of borrower’s financial condition

2. Negotiation with bank or NBFC

3. Approval of reduced settlement amount

4. Written settlement offer from lender

5. Lump-sum payment within agreed timeline

6. Loan closure confirmation

Borrowers must ensure written approval before making any payment.
Source: HDFC Life – Loan Settlement Process
👉 https://www.hdfclife.com/insurance-knowledge-centre/loan-and-investments/loan-settlement

Does One-Time Settlement Affect Your CIBIL Score?

Yes, OTS can impact your credit score. Accounts settled under OTS are usually marked as “Settled” instead of “Closed”, which may reduce the score initially. However, disciplined financial behaviour can gradually improve the score.

Settling a loan is still better than prolonged default or legal action.
Source: CIBIL – Credit Report & Settlement Impact
👉 https://consumer.cibil.com

Common Myths About One-Time Settlement

Myth: OTS is illegal
❌ False. OTS is a legally accepted banking practice.

Myth: Only banks offer OTS
❌ NBFCs and digital lenders also offer settlement options.

Myth: Borrowers should negotiate alone
❌ Professional negotiation improves success rate and prevents misuse.
Source: Financial Express – Loan Settlement Rights
👉 https://www.financialexpress.com/money/

How Facile Quick Settlement LLP Helps Borrowers

Facile Quick Settlement LLP provides professional and ethical support to borrowers seeking lawful loan closure.

Our Services:

✔ OTS eligibility evaluation
✔ Negotiation with banks, NBFCs & digital lenders
✔ Written settlement documentation
✔ Legal notice handling
✔ RBI & Nodal Officer escalation support
✔ Post-settlement guidance

We ensure borrower rights are protected throughout the process.

Important Legal Reminder

❌ Loan default is not a criminal offence
❌ Verbal settlement promises are unsafe
❌ Harassment is illegal under RBI norms

✅ With proper legal guidance:

• Loans can be settled

• Legal risk reduces

• Mental peace is restored

Need Professional Help?

If you are struggling with
personal loans, credit cards, instant loan apps, or NBFC loans, One-Time Settlement may be the right solution.

📞 Facile Quick Settlement LLP
📲 Phone / WhatsApp: +91 9599496846
🌐 Website: www.facilequicksettlement.com
📸 Instagram: @facilequicksettlement.in