What is the OTS Loan Repayment and EMI program? How to apply for the OTS program online?
Customers of non-performing assets (NPAs) of a bank can avail OTS services online at a bank. If the loan is not repaid to the bank, the customer’s credit rating will also be degraded. To avoid them, OTS is a useful opportunity for NPA borrowers.
The OTS amount must be paid within 6 months from the date of approval of the OTS, with 25% upfront and the balance within 6 months without any interest. If the money is paid within one year, interest at the base rate for the 6th month to one year will need to be paid. However, in exceptional cases, the OTS payment can be extended up to 2 years with interest.
Special OTS regime: GNP
The Punjab National Bank, in July 2021, introduced a special OTS program for its clients who could not repay the loan due to the pandemic, for the NPA account of Rs. 50,000, up to 5 crore. We can get a discount of 25 to 80%. The OTS amount range for NPA from Rs. 50 lakh to Rs. 5 crore, will depend on the secure and unsecured part. The scheme will remain in effect until March 31, 2022 and will cover NPA accounts from March 31, 2021. Agriculture accounts for over Rs. 10 lakhs will also be covered. For substandard student loan accounts eligible up to Rs. 7.50 lakhs, settlement at 70% of the outstanding balance; in addition, 85% of the account balance of all other qualifying substandard accounts will be settled. All other important information relating to the PNB OTS Scheme can be found here: https://www.pnbnet.org.in/OTSCF/
Earlier, in November 2020, the SBI introduced the OTS program âRinn Samadhan 2020-21â, for NPA borrowers who could not repay the loan amounts. The bank said: âThe OTS NPA and AUCA account recovery program is launched in the current fiscal year, to increase our NPA and AUCA recovery efforts for units with outstanding amounts over Rs. 20 Lakhs and up to Rs. 50 Crore and classified as D1, D2, D3, Loss or AUCA and AUCA Reversed Accounts as of 03.31.2020. “
How to apply for the OTS program online?
To apply for the OTS program online, the NPA customer must ensure that their mobile phone number is registered with the bank for SMS banking services. This 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 this page, the NPA borrower must fill in the applicant’s name, account number, country, email id, outstanding balance, OTS offer, captcha code, etc. After completing the page, another window will open asking for the OTS Application. You can also track the status of the OTS request online on the same page.
For example, Bank of Baroda and Punjab National Bank customers can apply for the OTS program here:
However, NPA borrowers with export / import accounts will need to physically address the bank branch. The bank will accept or reject the proposal, depending on the collection policy and the bank guidelines issued.
Importance of OTS for the MSE sector
The Single Regulation (OTS), a very old program noted by the RBI, is very important to the MSE sector in India, which is one of the largest employers in the country, and forms the backbone of the economy with the Agri sector. In accordance with the priority sector guidelines issued by the RBI, only micro and small business sectors can be included in the priority sector. MSE contribution to GDP, exports are significant, however, the sector remains under pressure. The pandemic emerged as another obstacle for the sector to shut down and interrupted income generation for about a year. Many MSE owners had taken out loans earlier, which they could not repay due to massive losses. So the OTS program for them was very helpful.
The South Indian Bank said in an official note: “In the case of loans to micro and small enterprises (MSE), officials are allowed to authorize the settlement even if there is no return or even with the write-off of part of the principal amount subject to their sanctioning powers NPA accounts in the MSE sector may be closed by OTS, the bank granting the borrower certain principal / interest concessions or both, provided that the account is closed within a specified time.
âThe level of sacrifice to be authorized on an account must be considered after taking into account the history of the account, the nature of the default (voluntary or not), the value of the securities available, the borrower’s resources, etc. on a case-by-case basis, âthe bank added.
The OTS program made headlines again recently after Andhra Pradesh Chief Minister YS Jagan Mohan Reddy spoke out on the program and asked his officials to publicize the benefits of the program. housing loans. Reddy said his government would forgo housing loans taken out by the poor, amounting to Rs. 10,000 crore. Registrations will also be free.