Negotiation of one time settlement - bank loan


My relative had borrowed a loan amount of Rs.30 Lakh 3 years ago against land as collateral from SBI Bank. Now the total amount including principal and interest stands at Rs.39 Lakh.  However, due to the financial pressure, they were not in a position to pay the amount regularly. As a result, the bank started serving notice.

Now my relative went to the bank and discussed with the Dy. Gen Manager regarding one-time settlement amount.The DGM told that we can reduce only 2 Lakhs from the outstanding amount ie) Rs.37 Lakhs and you have to pay us Rs.14 Lakh initially within 10 days.

My relative is now in a position to pay only the principal amount. She is planning to visit the DGM next week and ask for further negotiation. Kindly suggest as to the reasonable amount that can be reduced further. Is there any other higher authorities in the bank whom we can meet to negotiate further.

Also, let me know if there are any guidelines set by RBI for one-time settlement of loan or is it the bank's discretion to decide on OTS. Kindly give your suggestions.



It is the individual bank's discretion.  There is no RBI guidelines in this regard.  As already replied to you earlier, it is for you to negotiate and come to an acceptable figure.  There is no law involved here.  The negotiation is between a lender and a borrower.




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