Kagaznama

One-Time Settlement (OTS) Proposal

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Also called

OTS proposal
OTS request letter
compromise settlement proposal
full and final settlement offer to bank
settlement request letter
one-time settlement application
ek-musht samadhan proposal

When you need it

For when you're behind on a loan or credit card, can't clear the full dues, and want to offer the lender a lump sum (or short series of payments) to close the account — for a bank, HFC or NBFC facility in your own name. Two warnings first.

Limitation: if your last payment or written acknowledgement was over three years ago, stop — signing this can revive a dead claim, and 'without prejudice' doesn't reliably prevent that; get a lawyer to check the dates. Credit record: an accepted OTS reports as 'settled', not 'closed' — worse than a late-payment history, staying on record for years (bureaus set their own retention; no RBI rule fixes one). Use an OTS only when you genuinely can't pay in full — ask for restructuring, a moratorium or a lower EMI first, and try to get the lender to agree in writing to re-report as 'closed' if you later pay the waived amount (paragraph 10 asks for this). Get the sanction letter to state, before you pay: the exact settlement amount and payment dates, a No Dues Certificate and release of security/documents/every registered charge, discharge of any guarantor, withdrawal of recovery proceedings, and the exact bureau-reporting wording. If there's no response, escalate in writing: the branch/recovery office, then the lender's Principal Nodal Officer (bank/NBFC) or Grievance Redressal Officer (HFC), then — for a bank or covered NBFC — the RBI Ombudsman under the Reserve Bank – Integrated Ombudsman Scheme, 2026 (in force 1 July 2026, replacing the 2021 scheme; file free at cms.rbi.org.in or call 14448, after a 30-day wait and an unsatisfactory or no reply, within 90 days). Housing finance companies are excluded from that Scheme — their route is the Grievance Redressal Officer, then the National Housing Bank (paragraph 12 picks the right one). Neither forum can force acceptance, but both can act on a lender that never replied or reported wrongly. Keep proof of delivery — a receiving stamp, registered post with acknowledgement, or email. Not covered: a company/LLP/partnership borrower, a deceased borrower's account settled by heirs, an insolvency-moratorium account, a guarantor settling alone, or a restructuring request instead. If fraud-classified or a named wilful defaulter, see a lawyer first.

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See stamp duty, registration and witnesses

What follows is the position for this kind of document. The amount is set by the state the property is in and it changes, so the figure for your own state is worth confirming at the sub-registrar’s office before you pay anything.

Stamp duty

None — a proposal creates/transfers/extinguishes no right, so nothing in Schedule I or State Stamp Acts charges it; plain A4 paper. Article 1's nominal debt-acknowledgement duty doesn't apply (paragraph 7 is a promise to pay, which Article 1 excludes); not an agreement (no Article 5) or witnessed (not a 'bond', s.2(5)). What comes later — a settlement deed, or a mortgage reconveyance/release — is chargeable at the State's rate.

Registration

Not possible — the Registration Act, 1908 doesn't reach a proposal letter. Relevant only after payment: the mortgage discharge may need registering; a CERSAI/ROC charge needs separate satisfaction.

Notarisation

Not required — adds cost and can look like a formal admission. Some lenders separately want a notarised affidavit of assets/means — a different document; give it only if asked, and read before swearing.

Witnesses

None — staying unattested keeps it from being a 'bond' (s.2(5)), avoiding bond duty. What matters: proof of delivery — a receiving stamp, registered-post acknowledgement, or delivery report.

Request Stamp Paper

Sample preview — placeholder answers, not your data

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WITHOUT PREJUDICE

Date: 7 April 2026
Place: Ludhiana

FROM
Rahul Deshmukh
X
Mobile: X
Email: X
PAN: ABCDE1234F

TO
The Branch Manager
State Bank of India
Model Town Branch, Ludhiana
X
Email: X

SUBJECT: LOAN ACCOUNT NO. X - Home Loan in the name of Rahul Deshmukh - PROPOSAL FOR ONE-TIME SETTLEMENT

Sir / Madam,

1. I am the borrower in the Home Loan account bearing account number X, serviced through your Model Town Branch, Ludhiana office. The account is held jointly with X as co-borrower. In this letter, "the Lender" means State Bank of India. I write to place before the Lender a proposal for a one-time settlement of this account, and I request that it be put before the authority competent to decide it under the Lender's board-approved settlement policy, framed in terms of the Reserve Bank of India (Framework for Compromise Settlements and Technical Write-offs) Directions, 2023 dated 8 June 2023, or the equivalent policy applicable to the Lender.

2. Particulars of the account.

Borrower: Rahul Deshmukh
Co-borrower: X
Guarantor: X
Facility: Home Loan
Loan account number: X
Date of sanction: 1 April 2026
Amount sanctioned: ₹25,000 (Rupees Twenty Five Thousand only)
Total repaid by me to date: ₹25,000 (Rupees Twenty Five Thousand only)
Dues as on 2 April 2026, as per the Lender's records:
Principal outstanding: ₹25,000 (Rupees Twenty Five Thousand only)
Interest outstanding: ₹25,000 (Rupees Twenty Five Thousand only)
Other charges: ₹25,000 (Rupees Twenty Five Thousand only)
Total claimed: ₹25,000 (Rupees Twenty Five Thousand only)
Security held by the Lender: Equitable mortgage by deposit of title deeds of Flat No. 402, Shreeram Residency, Model Town, Ludhiana 141002. The Lender holds the original registered sale deed dated 12 March 2018, the jamabandi extract and the original share certificate.

3. Repayment record and default. I serviced this account until 3 April 2026, when I missed the first instalment. I understand the account was classified as a Non-Performing Asset on 4 April 2026. The recovery steps taken by the Lender so far, as known to me, are these: A demand notice under section 13(2) of the SARFAESI Act, 2002 dated 4 January 2025 for Rs. 41,80,000, and a possession notice under section 13(4) affixed on the property on 19 May 2025. I have also received a notice dated 2 February 2025 under section 138 of the Negotiable Instruments Act, 1881 in respect of a cheque of Rs. 34,000. Pending consideration of this proposal, I request that no further step be taken in those proceedings. I also request that I be informed of the last date on which I may redeem the security under section 13(8) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where that Act applies to the steps taken. I do not dispute that the account is in default. What I am not in a position to do is pay the full amount claimed.

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