How to Write a Loan Settlement Request Letter to Your Bank

To, The Assistant General Manager / Branch Manager, State Bank of India, Stressed Assets Recovery Branch (SARB), Dwarka Sector 12 Branch, Regional Recovery Department, Head Office / Regional Branch Date: 01/11/2026 SUBJECT: FORMAL REQUEST FOR ONE-TIME SETTLEMENT (OTS) UNDER RBI COMPROMISE FRAMEWORK LOAN ACCOUNT NUMBER: 30987654321 BORROWER NAME: Rajesh Sharma Respected Sir / Madam, 1. I am writing to you regarding my loan facility bearing Account Number 30987654321, maintained with your Dwarka Sector 12 Branch branch under the name Rajesh Sharma. 2. I have been a bonafide borrower and maintained regular monthly installments in the past. However, due to genuine and severe financial hardship, I have reached a state of complete financial inability to continue servicing regular monthly installments. Specifically: Due to sudden and involuntary employment termination on 15/04/2026, my primary household income has ceased completely. Despite active efforts over the past several months, I have been unable to secure alternate employment. I am currently facing an acute cash crunch and my existing liabilities far exceed my total liquid assets. 3. As a direct consequence of this severe financial distress, my household liabilities exceed my available liquid resources. The current total balance claimed on the loan account stands at approximately Rs. 4,50,000/-. 4. I wish to resolve this outstanding obligation in good faith and without prolonged civil litigation. After mobilizing emergency financial assistance from close relatives, I hereby submit my formal proposal to settle and close this loan account under a One-Time Settlement (OTS) for a lump-sum amount of: PROPOSED SETTLEMENT AMOUNT: Rs. 1,80,000/- (Rupees One Lakh Eighty Thousand Only) 5. In accordance with the Reserve Bank of India Framework for Compromise Settlements (Circular DOR.STR.REC.20/21.04.048/2023-24) and Section 63 of the Indian Contract Act 1872, I respectfully request the competent authority to: a) Waive 100% of the accumulated penal charges, overdue interest, and late processing fees. b) Accept the proposed lump-sum amount of Rs. 1,80,000/- as full and final discharge of all debts under this account. c) Issue an official Settlement Sanction Letter on corporate bank letterhead detailing the accepted amount and payment timeline. d) Provide an undertaking to report the account as "Settled" with zero remaining balance to all credit bureaus (CIBIL, Experian, CRIF, Equifax) within 30 days of remittance. e) Commit to issuing a formal No Dues Certificate (NDC) and returning all security cheques / NOCs within 30 days of full settlement credit. 6. I confirm that upon receipt of the official written sanction letter on bank stationery, I will remit the approved sum directly into the loan account via NEFT / RTGS. Thanking you in anticipation of your sympathetic consideration. Yours faithfully, (Signature) Rajesh Sharma Registered Mobile: +91 98765 43210 Registered Email: rajesh.sharma@example.com Permanent Address: Flat 402, Shanti Heights, Sector 12, Dwarka, New Delhi 110075 ENCLOSURES (Documentary Hardship Proof): 1. Copy of PAN Card and Aadhaar Card 2. Copy of formal Termination / Relieving Letter 3. Bank statement of the last 6 months showing zero salary credit 4. Copy of EPFO passbook reflecting employment cessation