CGTMSE LOAN NPA CASE IN DRRT AND OTS SETTLEMENT

Dear Client,

You should be clear that the Debt Recovery Tribunal (DRT) generally does not have the power to compel a bank to invoke coverage under the Credit Guarantee Fund Trust for Micro and Small Enterprises or to grant a One Time Settlement (OTS), as OTS is a matter of bank policy and commercial discretion. However, you can definitely approach the DRT to challenge any irregularities in the loan process particularly if the bank took a third-party guarantee in violation of CGTMSE guidelines, which are meant to provide collateral-free loans.

If you can show that such a guarantee defeats the very purpose of the CGTMSE scheme or was imposed unfairly, the tribunal may examine the legality of the bank’s action. At the same time, you should submit a written OTS proposal directly to the bank, highlighting your financial hardship, your consistent payment of CGTMSE guarantee fees, and requesting that the bank invoke CGTMSE cover and settle the account.

If the bank acts arbitrarily or unfairly, you may also challenge such action before the DRT or even the High Court, but practically, courts usually encourage settlement rather than force specific OTS terms.