What Is OTS Scheme For Loan Repayment And EMI? How To Apply For OTS Scheme online?

Payment of OTS

The Non-Performing Assets (NPA) customers of a bank can avail themselves of the online OTS services, in a bank. If one does not pay back the loan to the bank, the customer's credit score will also be downgraded. To avoid these, OTS is a helpful opportunity for NPA borrowers.

The OTS amount needs to be paid within 6 months from the date of approval of OTS, with 25% upfront and balance within 6 months without any interest amount. If the money is paid within a year, then interest at Base Rate from the 6th month to one year will have to be paid. However, in exceptional cases, payment of OTS can be extended up to 2 years within interest.

 

Special OTS Scheme: PNB

The Punjab National Bank, in 2021, July introduced a Special OTS Scheme for its customers who could not repay the loan due to the pandemic, for NPA account from Rs. 50,000, up to 5 crores. One can get a rebate of 25-80%. The OTS amount range for NPA from Rs. 50 lakh to Rs. 5 crores, will depend on the secured and unsecured portion. The scheme will remain in force till March 31, 2022., and will cover NPA accounts as of March 31, 2021. Agriculture accounts for more than Rs. 10 lakhs will also be covered. For eligible substandard education loan accounts up to Rs. 7.50 lakhs, the settlement at 70% of outstanding balance; additionally, all other eligible substandard accounts' 85% of account balance will be settled. All other important information related to PNB OTS Scheme can be searched here: https://www.pnbnet.org.in/OTSCF/

Earlier, in 2020, November, the SBI introduced the 'Rinn Samadhan 2020-21' OTS scheme, for NPA borrowers who could not repay the loan amounts. The bank stated, "OTS scheme for recovery in NPA and AUCA accounts is being launched in the current financial year, to augment our NPA and AUCA recovery efforts for units with outstandings above Rs. 20 Lakhs and up to Rs. 50 Crore and classified as D1, D2, D3, Loss or AUCA and Accounts reversed from AUCA as on 31.03.2020."

How to apply for OTS Scheme online?

To apply for the OTS Scheme online, the NPA customer has to ensure that her/his mobile number is registered with the bank for SMS banking services. It is important because the bank will send OTP to the registered mobile number. On the bank's website, there will be a different portal for OTS applications. On that page, the NPA borrower needs to fill up the applicant's name, account number, country, e-mail id, outstanding balance, OTS offer, captcha code, etc. After filling the page, will lead to another window to apply for the OTS application. You can also track the OTS application status online on the same page.

For example, customers of Bank of Baroda and the Punjab National Bank can apply for the OTS scheme here:

https://bobacs.bankofbaroda.co.in:8443/#/settlement

https://www.pnbnet.org.in/OTSCF/custEntry

However, NPA borrowers with export/import accounts will have to approach the bank's branch physically. The bank will accept or rejection of the proposal, depending on the Recovery Policy and guidelines of the Bank issued.

Importance of OTS for the MSE sector

One-time settlement (OTS), a very old scheme noted by the RBI, is very important for the MSE sector in India, which is one of the largest employers in the country, and stands as a backbone of the economy along with the Agri sector. As per the Priority Sector guidelines issued by the RBI, only the Micro and Small Enterprises sectors qualify for inclusion under the priority sector. MSE's contribution to GDP, exports are significant, however, the sector remains under pressure. The pandemic emerged as another bar for the sector to halt its activities and interrupted income generation for around one year. Many MSE owners had taken loans earlier, which they could not repay due to massive losses. So, the OTS scheme for them was very helpful.

The South Indian Bank in an official note said, "In the case of loans granted to Micro & Small Enterprises (MSE), the functionaries are permitted to allow settlement even if there is no yield or even with the write-off of a portion principal amount subject to their sanctioning powers. NPA accounts in the MSE sector can be got closed by OTS wherein the bank allows the borrower certain concessions in principal/interest or both, provided the account is closed within a specified period."

"The level of sacrifice to be allowed in an account shall be considered after taking into account history of the account, the nature of default (willful or otherwise), the value of securities available, resources of the borrower, etc and shall be considered on a case to case basis," the bank added.

The OTS scheme has again been in news recently after Andhra Pradesh Chief Minister Y. S. Jagan Mohan Reddy was vocal about the scheme and directed his officials to spread awareness about the benefits of the scheme for housing loans. Reddy said that his government will waive off the housing loans that were taken by the poor, amounting to Rs. 10,000 crore. The registrations will also be done for free.