NPA Resolution and OTS Funding Tamil Nadu

If a bank has tagged your account as a Non-Performing Asset, you’re not at the end of the road - you’re at a fork in it. The difference between long legal battles and a clean restart often comes down to knowing the right pathway - One-Time Settlement (OTS), SARFAESI defense, Lok Adalat, or NCLT and acting with speed and strategy.

The reality check most borrowers miss
An NPA is simply a loan overdue for 90+ days; after that, banks provision, and your access to credit shrinks. That label hurts your business relationships as much as your balance sheet. But it also opens structured routes to resolve dues and rebuild credit if you negotiate the right offer and document your hardship properly.

OTS: quickest path to closure
One-Time Settlement lets you close the account with a negotiated lump sum usually lower than the gross outstanding because the bank weighs time, legal costs, and recovery odds. The move that unlocks OTS for many borrowers is arranging a bridge through OTS funding: a new lender pays the OTS amount, you repay in installments, and your NPA status is closed. To get a bank to engage seriously, present a credible offer, proof of funds (or a funding term sheet), and a plan that keeps operations alive and cash flows stable.

What works in practice:
1.) Lead with numbers: today’s value of collateral, realizable value in auction, recent sector pricing.
2.) Make it easy to say yes: propose a timeline, mode of payment, and security where feasible.
3.) Don’t overpromise: banks prefer a smaller, certain cheque to an inflated, uncertain offer.

Chennai edge: on-ground expertise and faster execution
Chennai has a deep bench of NPA consultants, insolvency professionals, and lenders who specifically structure OTS/“NPA takeover” deals. If you’re in manufacturing, export textiles, auto ancillaries, retail, or logistics, you’ll find specialists who understand seasonal cash cycles, margin compression, and buyer credit delays and can translate that into a pragmatic settlement narrative the bank can accept.

SARFAESI: respond smart, not late
If you’ve received a 13(2) notice, put your response on record within the window. Challenge valuation gaps, point out process deviations, and propose a time-bound settlement with proof of funding. If 13(4) possession is threatened, be ready with a DRT application that’s fact-dense: cash flow evidence, buyer POs, and an executable settlement plan. Many cases are won or lost not on emotion but on documentation and timelines.

Lok Adalat: fast, final, and affordable
For smaller tickets and retail/education/MSME loans, Lok Adalat is often the surest way to close matters. It’s conciliatory, low-cost, and the award is final. Arrive with a realistic figure and part-payment readiness. Banks appreciate certainty; you walk away with closure and a clear credit-rebuild plan.

NCLT and IBC: for real revival, not mere recovery
If dues are large and the business has genuine revival prospects, the IBC route via NCLT is a structured path: creditor committee, resolution professional, time-bound plan. It’s not a shortcut to dodge dues; it’s a formal process to maximize value and preserve jobs. If your business fundamentals are sound but debt is misaligned, this is often the least-destructive option.

1.) A 21-day action plan that actually moves the needle
Days 1–3: Gather everything - sanction letters, statements, notices, latest stock/debtor lists, collateral papers, audited and management financials. Map exact overdues and interest stops.

2.) Days 4–7: Decide your route: OTS with funding, Lok Adalat for smaller exposures, or SARFAESI defense with an offer on table. Establish your evidence-based, not aspirational, settlement anchor number.

3.) Days 8–12: Set up funding support, such as an NBFC bridge or an OTS funding term sheet; lock down timelines and checklists for documentation.

4.) Days 13–16: Present the bank with a formal, time-bound proposal that includes undertakings, an installment plan, and proof of funds.

5.) Days 17–21: Prepare a fallback plan (Lok Adalat/DRT), escalate constructively (regional office if necessary), and, if necessary, obtain temporary protection.

Stay away from these five typical errors.
1.) Waiting for the "perfect" month to pay—good offers are killed by time decay.
2.) Offering high numbers without proof—erodes credibility fast.
3.) Ignoring notices—destroys leverage and shortens your options.
4.) Under-documenting hardship—banks need evidence, not anecdotes.
5.) Neglecting post-closure clean-up—ensure bureau updates and NOC collection promptly.

Why this matters now in Tamil Nadu?
From tariff shocks to demand volatility, many sectors in the state are managing thinner margins and longer receivables. That’s precisely why lenders are open to quick, evidence-backed settlements that beat uncertain legal recoveries. Well-prepared borrowers are closing NPAs, unlocking working capital again, and getting back to growth.

How Credit Curators can help end to end?
1.) Feasibility and settlement modeling: what the bank will likely accept and why.
2.) OTS negotiation and documentation: numbers, valuations, and compliance-perfect files.
3.) OTS funding and NPA takeover: arranging capital to close the settlement.
4.) SARFAESI/DRT strategy: responses, timelines, and protective relief where warranted.
5.) Credit rebuild: bureau corrections, trade credit reactivation, and banking relationships.

Take the first step today. The earlier you bring a credible plan with proof of funds, the better your odds of a fair settlement and a faster return to business as usual.