If you run a business in India today, you already know one hard truth: even good businesses can land in financial trouble. A delayed project, a cancelled order, a policy change or a bad year is sometimes all it takes for a healthy account to slide towards stress and, finally, into NPA territory.

What most promoters underestimate is how quickly the label “NPA loan” starts to define their entire story. Vendors get nervous, lenders stop picking up calls, and every conversation becomes about recovery instead of revival. Yet, in the same system, other stressed companies manage to quietly close old exposures, raise fresh funds and relaunch growth plans. The difference usually comes down to how early and how intelligently they use OTS funding, NPA funding structures and project funding solutions.

When a Loan Turns into an NPA: What Really Changes
On paper, an NPA is simply a loan where interest or principal has not been serviced for a specified period. In reality, the moment an account turns into an NPA loan, the rules of the game change. Banks must provide higher capital, internal risk teams step in, and the relationship shifts from “growth partner” to “recovery mode”.

The promoter feels it first in the form of constant follow-ups, legal notices, and an almost complete freeze on fresh working capital. What often gets missed is that the underlying business may still be viable. The problem is not always the project; it is usually the structure, timing and rigidity of the existing funding.

This is exactly where specialised NPA funding and OTS funding solutions step in: they do not magically erase the problem, but they reframe it into something that can actually be solved.

OTS Funding: More Than a Last-Minute Deal with the Bank
In most conversations, “one-time settlement” sounds like a desperate last throw of the dice. In practice, when handled professionally, OTS funding can be a very strategic move.

Think of it this way. The bank wants a clean exit from a sticky exposure. The business wants a realistic number and a structured way to pay it. OTS funding brings in a new financier who pays the bank the agreed OTS amount and then replaces the old loan with a fresh structure that matches the real cash flows of the business.

That might mean:

- A longer tenor instead of constant short-term rollovers.

- A realistic moratorium that gives the project time to start generating cash.

- A blended cost of capital that is still cheaper than ongoing penalties and legal costs.

For the borrower, the psychological shift is huge. Instead of fighting on three fronts - operations, lenders and courts, they deal with one new, aligned funding partner. The NPA tag goes, the account becomes manageable again, and the promoter can start having forward-looking discussions with suppliers, customers and even mainstream banks over time.

NPA Funding: Turning a Stressed Asset into a Structured Opportunity
NPA funding is not a single product; it is an ecosystem of capital and structures created specifically for stressed situations. It can involve investors who understand distress, Asset Reconstruction Companies that acquire bad loans from banks, or specialised credit funds that are comfortable with complex risk.

What matters for the business is not the jargon but the outcome:

- Old, expensive and rigid debt is swapped for a structure that recognises the real value of the asset or project.

- Fragmented exposures across multiple lenders are often consolidated, reducing noise and disputes.

- In some cases, part of the debt can be linked to performance, easing pressure during the turnaround phase.

Used well, NPA funding stops the slow bleed of a business. It creates a defined runway: a period during which the focus shifts from firefighting to fixing the business model, stabilising operations and preparing for more traditional funding in the future.

Project Funding: The Missing Link in Many Turnarounds
One big reason good projects fail is that they are funded like short-term transactions instead of long-term, lumpy cash-flow businesses. Project funding exists to correct that mismatch.

For infrastructure, real estate, manufacturing expansion or large capex-heavy ventures, project funding is designed around actual milestones and gestation periods. Instead of forcing the promoter to service full interest from day one, well-structured project funding recognises that revenue comes in waves: land acquisition, approvals, construction, ramp-up, then stabilisation.

In a post-NPA situation, this becomes critical. Many promoters manage to close an OTS or restructure an NPA loan but then starve the underlying project of capital. The result is predictable: delays, more overruns, and another round of stress. When OTS funding, NPA funding and project funding are aligned, the story changes. One leg cleans up the past, the second manages the legacy burden, and the third actually funds the future.

How a Stressed Promoter Should Think About These Tools
If your account is already in SMA or NPA status, it is tempting to do only what is urgent: respond to notices, attend calls, sign whatever is put in front of you. That may buy time, but it rarely solves the problem.

A more strategic approach is to map your situation against three questions:

1.) Can OTS funding help draw a line under the old exposure at a number the business can realistically service?

2.) Is there a case for NPA funding to bring in a specialist who understands distress and is willing to structure a deeper solution?

3.) Does your project or business model actually require dedicated project funding to become viable instead of being treated like a standard term loan?

Once those answers are clear, conversations with lenders, investors and advisors become more grounded. You are no longer asking for vague “support”; you are proposing a path that has worked for many other stressed businesses.

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