What is the Full Form of OTS in Banking
The OTS full form in Banking is One Time Settlement. A One Time Settlement is a legal contract between a financial institution and its borrower to settle a Non-Performing Loan at a reduced price, which benefits both parties by reducing the bank’s bad loans and relieving the borrower of all legal and financial issues associated with them.
Why is OTS used in banking?
OTS is an agreement between a borrower and a lender in which the former agrees to settle the debt within a specified period and prohibits the lender from pursuing legal action against him or her. This OTS sum should be paid within six months of approval. I hope the OTS meaning is now evident to you.
Implementation of OTS:
According to the RBI, a bank may grant OTS to a borrower if he or she promises to repay the outstanding loan by the specified date. The borrower can pay the sum one at a time or in portions. The borrower will pay 25% upfront and the remaining 75% in annual payments. They should also take note that interest must also be paid in OTS. These answers should be sufficient to help you understand the whole form of OTS in banking, as well as its meaning.
