MSME One Time Settlement (OTS) Scheme - Allahabad Bank

Allahabad Bank offers a One Time Settlement (OTS) Scheme for Micro, Small and Medium Enterprises (MSMEs) to manage Non-Performing Assets (NPA), including debts that have been written off partially or fully. This initiative resolves claims and is positioned as a strategic internal arrangement. In this article, we will explore the features, benefits, and terms of the MSME One Time Settlement Scheme offered by Allahabad Bank.

About Allahabad Bank

Established as the first joint stock bank in India, Allahabad Bank has been a stalwart in the financial domain since 1865. Headquartered in Kolkata, the bank celebrated its 150th anniversary on April 24, 2014. Boasting over 2,500 branches throughout India as of March 2012, Allahabad Bank held a market capitalization of USD $543 million as of May 2016 and ranked 1834 on the Forbes Global 2000 list.

Features of the OTS Scheme

The Allahabad Bank OTS scheme allows MSMEs to settle various forms of debts, including decreed debts and cases pending in Courts, DRTs, BIFRs, AIFR, or CDR, pending the necessary consent from the judicial or legal bodies involved. This scheme also includes failed compromise cases under the NPA category. For more information on SMEs and compliance, refer to our One Person Company Annual Compliance section.

One Time Settlement Amount

The One Time Settlement (OTS) amount is determined by evaluating a benchmark scorecard after assessing the securities and net worth of borrowers or guarantors. This assessment aims to guide the compromise amount under the OTS module effectively. The determination of net worth focuses on the accessibility of other assets, excluding those pledged to the bank. Without proper quantification, accurately reflecting a borrower's or guarantor's ability to repay the loan may be challenging. For entrepreneurs considering forming a company, explore our resources on One Person Company Registration.

Down Payment & Repayment Terms

A down payment ranging from 10% to 25% of the approved compromise sum is required. In cases where the full compromise sum cannot be paid immediately, the outstanding amount must typically be settled in a lump sum within 30 to 90 days of the bank's approval. In exceptional cases with cash flow limitations or delayed asset realization, a repayment extension may be granted. The sanctioned extension, covering the complete compromise sum or remaining balance after initial payments, can be obtained subject to the payment of applicable interest. Discover more about company structuring through One Person Company Startup for a detailed guide on establishing new enterprises in India.

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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.