Personal Loan Settlement Letter Format

To,
The Branch Manager / Delinquent Asset Recovery Division,
[Name of Bank / NBFC],
[Branch Address / Regional Office Address],
[City, State, PIN Code]

Date: [DD/MM/YYYY]

Subject: Formal Request for One-Time Settlement (OTS) for Personal Loan Account No: [Your Loan Account Number]

Respected Sir / Madam,

I am writing this application with reference to my Personal Loan Account Number [Your Loan Account Number], sanctioned by your esteemed institution on [Sanction Date] for a principal sum of Rs. [Sanctioned Loan Amount].

I have maintained an unblemished repayment track record with your bank for several years. However, due to unforeseen and severe financial distress caused by [Mention Reason: unexpected job loss / catastrophic medical emergency in the family / severe business loss], my primary source of livelihood has been severely disrupted since [Month, Year]. Despite my sincere intentions and numerous personal sacrifices, I am no longer in a position to service the regular equated monthly installments (EMIs) of Rs. [Monthly EMI Amount].

As on date, the total outstanding balance reflected against my account stands at Rs. [Total Claimed Outstanding Amount], which includes substantial penal interest and late payment charges. Given my current insolvency and absolute lack of alternative liquid assets, I am writing to humbly propose an amicable One-Time Settlement (OTS) under the Reserve Bank of India’s guidelines on compromise settlements.

I have arranged financial support from close family relatives who are willing to assist me with a one-time lump sum payment of Rs. [Proposed Settlement Amount in Figures] (Rupees [Proposed Amount in Words] Only) towards the full and final discharge of all my liabilities under this loan facility. This proposed sum represents the absolute maximum capital I can raise under my present circumstances.

I kindly request your good office to:
1. Consider my genuine financial hardship favorably and accept the proposed OTS amount of Rs. [Proposed Settlement Amount].
2. Waive all accumulated penal interest, penal fees, and legal processing charges.
3. Issue an official One-Time Settlement Sanction Letter on bank letterhead detailing the accepted amount, payment mode, and due date.
4. Issue a formal 'No Dues Certificate' (NDC) and closure certificate upon receipt of the agreed settlement sum, and initiate the corresponding update to credit information bureaus (CIBIL, Experian, CRIF High Mark).

Enclosed herewith are relevant documentary proofs supporting my financial hardship (copy of termination letter / medical bills / recent bank statements).

I look forward to your positive and prompt consideration of this mutual resolution.

Yours sincerely,

[Your Full Legal Name]
[Signature]
[Complete Postal Address]
[Mobile Number]
[Email Address]

Crucial Rules When Submitting a Settlement Application