One-time settlement (OTS) request for a loan
Asking the bank to settle a loan for a lump sum: loan details, the dues, the hardship, the offer and how it will be paid.
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Not yet reviewed by a lawyer. Check every line before it is signed.
How the paper begins
With Dastavo's sample details; the people and places are fictional. The words in blue are the ones you fill in.
To,
The Branch Manager,
Amar Co-operative Bank Ltd., Main Branch, Amarnagar
Subject: One-time settlement of loan account No. 00000098765
Sir/Madam,
1.I took a loan from your branch under loan account No. 00000098765: term loan for a dairy unit of ten milch animals, ₹10,00,000 (Rupees Ten Lakh only), sanctioned on 15-06-2021, secured by the mortgage of House No. 88, Model Town, Amarnagar, and the hypothecation of the animals.
2.According to the bank, ₹8,45,000 (Rupees Eight Lakh Forty-Five Thousand only) is outstanding in the account as on 30-09-2026, and the account was classified as a non-performing asset (NPA) on 31-03-2025. The bank has taken this recovery action: a recall notice dated 10-02-2026.
3.I have repaid what I could, but I am now unable to pay the full dues because six of my animals died of disease in 2025, milk prices fell, and I was in hospital for two months.
4.To close the account once and for all, I offer ₹5,50,000 (Rupees Five Lakh Fifty Thousand only) as a one-time settlement, in full and final settlement of all dues in this loan account.
5.With this letter I have paid ₹55,000 (Rupees Fifty-Five Thousand only) by demand draft No. 000456 dated 12-10-2026 as an advance, to be adjusted in the settlement amount, or dealt with as your scheme provides if the offer is not accepted. I shall pay the rest within ninety days of the bank's approval of this settlement, raising it by selling my plot at Kalyanpur and borrowing from my brother.
The rest of the paper is in Dastavo.
What to bring
Papers to bring
- The loan sanction letter and the latest statement of the loan account
- Every notice received from the bank, the recovery agency or a tribunal
- Proof of the hardship: medical papers, a death certificate, or proof of the crop or business loss
- Proof of where the money will come from, such as an agreement to sell property or a letter from a relative
- The draft or transfer receipt for the advance, if the bank's scheme asks for one
Where to go
At the branch that keeps the loan, or the bank's recovery branch if the account has moved there; get a receiving on your copy.
Good to know
- Pay the settlement amount only after the bank's sanction of it comes in writing, with the amount and the dates.
- A written offer usually counts as an admission of the debt; keep it short and true.
- After paying, collect the no-dues certificate, the release of the mortgage and the original papers. A settled loan usually shows as 'settled' in the credit report, which can make new loans harder for some years.
Papers and fees can change. Check with the office before you go. Guidance only, not yet reviewed by a lawyer.
Stamp paper
Plain paper is enough.