MSME One Time Settlement (OTS) Scheme - Allahabad Bank

Allahabad Bank operates a One Time Settlement (OTS) Scheme for MSME to effectively manage all Non-Performing Assets (NPA) including written off debts (partial / full) on settlement of all claims (if any) or as an internal arrangement. In this article, we look at the MSME One Time Settlement Scheme of Allahabad Bank in detail.

About Allahabad Bank

Allahabad Bank is a nationalized bank headquartered in Kolkata, India. It is the earliest joint stock bank in India. On 24 April 2014, the bank celebrated its 150th year of establishment. It was created in Allahabad in 1865. As on 31 March 2012, Allahabad Bank had more than 2,500 branches across India. The bank's market capitalization as on May 2016 was US$543 million and the Bank is ranked at 1834 on the Forbes Global 2000 list.

Features of OTS Scheme

The Allahabad Bank One Time Settlement (OTS) scheme can be used to settle decreed debts, certificate cases, bakijai cases, etc., and cases pending before Courts or DRTs or BIFRs or AIFR or CDR - subject to availing consent decree from the Courts or DRTs or BIFR or any relevant legal authority. In addition to the above, failed compromise cases, if any, under the above category of NPA will also be covered by the scheme.

One Time Settlement Amount

The One Time Settlement (OTS) amount or benchmark sum according to bench-mark score card after checking the securities, net worth of borrowers or guarantors, etc.. Based on benchmark sum, the compromise amount under OTS module is calculated.

The net worth of the borrower or guarantor is pinpointing of the accessibility of other assets excluding the assets that are charged to the bank. In non-appearance of quantification of present net worth, the appraisal of benchmark may not reflect the true capability of the borrower or guarantor to repay the loan.

Down Payment & Repayment Terms

A down payment of 10 to 25% of the compromise sum approved must be paid as down payment by the promoter.

Cases where compromise sum is not paid in bullet and is proposed to be paid in more than one instalment, the residual compromise sum (excluding above referred down payment) must be typically paid in lump sum within a period of 30-90 days of communication of bank’s approval. In extraordinary cases where the cash flow does not permit or assets will take time to be sold and realized, then concession from sanctioning authority, if possible on payment of interest (from date of actual communication of compromise terms to compromise proposal) can extend the repayment period of complete compromise sum or balance amount after the adjustment of proposed down payment.

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Frequently Asked Questions

Common questions about MSME One Time Settlement Scheme for NPAs.

The Allahabad Bank One Time Settlement (OTS) Scheme is a scheme offered by the bank to effectively manage its Non-Performing Assets (NPA), including written-off debts. It allows borrowers to settle their outstanding debts, including decreed debts, certificate cases, and cases pending before various legal authorities, by paying a one-time settlement amount.

The OTS Scheme is available to borrowers with Non-Performing Assets (NPAs) with Allahabad Bank, including those with decreed debts, certificate cases, bakijai cases, cases pending before Courts, DRTs, BIFRs, AIFR, or CDR, and failed compromise cases under the above categories.

The One Time Settlement (OTS) amount, also known as the benchmark sum, is calculated based on a benchmark score card that takes into account the securities, net worth of borrowers or guarantors, and other relevant factors. The compromise amount under the OTS module is then calculated based on this benchmark sum.

Yes, a down payment of 10 to 25% of the approved compromise sum must be paid by the promoter as an initial payment under the OTS Scheme.

If the compromise sum is not paid in full upfront, the remaining amount (excluding the down payment) must typically be paid in a lump sum within 30-90 days of the bank's approval communication. In exceptional cases, the repayment period may be extended with the sanctioning authority's concession and interest charges.

Yes, the Allahabad Bank OTS Scheme can be used to settle written-off debts, either partial or full, along with other types of Non-Performing Assets (NPAs).

Yes, the net worth of the borrower or guarantor, including the availability of other assets not charged to the bank, is considered while evaluating the benchmark sum and calculating the compromise amount under the OTS module.

If the current net worth of the borrower or guarantor cannot be quantified, the assessment of the benchmark sum may not accurately reflect their true ability to repay the loan. In such cases, the bank may consider additional factors or request more information.

Yes, the Allahabad Bank OTS Scheme can be used to settle cases pending before Courts, DRTs, BIFRs, AIFR, or CDR, subject to obtaining consent decrees from the respective legal authorities.

Yes, failed compromise cases under the eligible categories of Non-Performing Assets (NPAs) are also covered by the Allahabad Bank One Time Settlement (OTS) Scheme.