A one-time settlement is crucial for both banks and borrowers. Through OTS, banks try to reduce the bad loans from their books, and borrowers have a chance to close their NPA accounts at reduced pricing and get rid of all legal issues associated with it & save their precious property.
But, One-time settlement or OTS, puts a negative impact on the credit report of the borrower. The OTS is marked as settled in the credit report, which is not acceptable to new lenders. It also lowers the credit score of the borrower, which is also an important parameter for issuing a new loan.
So, borrowers find difficulty in raising loans after the OTS. So, how can they raise the loans/funds after doing an OTS with the previous bank?
Five ways to get a loan after One-Time Settlement (OTS)
- Taking a small consumer loan: Borrowers can avail of small consumer durable loans, which can be extended by lenders that somehow ignore the credit and only work on the repayment capacity & location of the borrower. And, the timely repayment of these small loans can improve their credit score, which ultimately helps in securing bigger loans in the future.
- Taking a loan against fixed deposits: One can create a fixed deposit in any of the banks and can raise a loan against that. A lot of businesses require an LC/BG facility that is only offered by banks. In this way, they can fulfill their requirement of LC/BG or even a credit line (OD). And, again, timely repayment of these loans increases your chances of getting more funds from other institutions.
- OTS Finance: The borrower can apply for a loan to repay a part or all of the OTS. There are a few companies active these days that provide finance for paying the OTS. So, one can also spare some money for the business working capital and also pay off the OTS successfully. This is also one of the best ways to improve one’s credit score & secure lending from other financial institutions.
- Private Lenders: One can take a loan from private lenders, but they are very costly as well as have strict lending policies, which are not favorable for general borrowing.
- Stress Financing Companies: These days, some of the companies provide stress financing, which means they offer funding to companies/borrowers who are under financial stress and unable to get loans from the traditional banking system. They provide loans to SMA1, SMA2, NPA stage, finance for clearing OTS, and offer loans after the One-time settlement (OTS).
In my opinion, there is one company that has a good track record of providing funds to stressed borrowers/companies. They are transparent & have a professional approach to the transactions. You can contact them; they’re running under the name of “Fund Source India”.
