Hello Everyone,
I have a loan CC account with SBI , which has become NPA and have been served the notice under surfasi act.
The bank has launched a OTS scheme the details of which I got from somewhere else on the Internet.
As per this scheme either the amount calculated under B or Distress value under A, which is higher shall be the OTS amount.
This appears absurd and non sense. Consider following scenarios:
- I have a CC limit of Rs.25.00 Lacs and outstanding in my account as per B by applying interest and cash & liquid security is Rs.15Lacs. The distress value of my asset is 18lacs. So according to the scheme OTS amount will be Rs.18Lacs and not 15Lacs.
- The amount outstanding as calculated under B comes to Rs.20 Lacs and distress value is 15Lacs. So OTS Value will be Rs.20Lacs as per the OTS
So what type of OTS scheme is this, in any case how can an OTS amount be highter than the outstanding amount. Can anyone explain?
Settlement Formula – OTS Amount:
While arriving at OTS amount, the value of security available should be the basic criteria, except in ‘Loss’ assets. Accordingly, the OTS amount in respect of NPAs (Doubtful and Loss) would be calculated as under:
|
Sl.No |
Particulars |
|
I. OTS for NPAs in Doubtful category |
|
|
A |
Distress Sale Value 75% of the Market Realisable Value (MRV) of all available securities (Immovable/ movable) to be treated as “Distress Sale Value”. (Two independent valuations are to be done and 75% of higher valuation should be taken) @ |
|
B |
Reference Recoverable Amount |
|
i) |
Outstanding Balance as on the date of NPA (i.e. Principal Outstanding + Interest + Cost & Charges, if any) |
|
ii) |
Add : Simple interest at documented rate or Prime Lending Rate (PLR-2%) / Base rate, whichever is lower, on reducing balance, from the date of NPA till the date of crystallization of OTS (i.e. up to the last date of preceding month when the OTS proposal is submitted) |
|
iii) |
Add : Debits raised in the account on behalf of the borrower for holding on operations / additional finance on account of restructuring, devolvement LC/BG etc. |
|
iv) |
Less : Cash recovery i.e. cash recovery and amount of appropriation of liquid securities, after the date of NPA till the date of crystallization of OTS (i.e. up to the last date of preceding month when the OTS proposal is submitted). |
|
v) |
Reference Recoverable Amount = {(i)+(ii)+(iii)-(iv)} |
|
C |
OTS amount would be higher of the two amounts as worked out at A and B. |
|
|
|
@ Valuation of properties
For accounts with outstandings upto Rs.1 cr, valuations as recorded in the Bank’s books, will be taken into account for arriving at OTS amount . However, if the borrower has any objection, two independent valuations by the Bank’s empanelled valuer will be done, the cost of which will be borne by the borrower. In all other cases , two independent valuations will be a must. However, in case a valuation has been carried out within six months prior to the OTS proposal, only one fresh valuation will be required. The cost of the valuations will be borne by the borrower.
