Expert Answer
Question:
Can I ask for installment-based settlement?
Answer:
Yes , you can definitely ask your bank or NBFC for an installment-based settlement instead of a single lump-sum payment.
How It Works
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In a one-time settlement (OTS), lenders usually prefer a lump-sum payment.
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But if you cannot arrange the entire amount at once, you can request the bank to let you pay the settlement amount in installments (for example, 3 to 6 tranches).
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Many banks allow this on a case-to-case basis, especially when they see the borrower is genuine and willing to clear dues.
What to Keep in Mind
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Written Agreement – Ensure the terms of installment settlement are clearly written and signed by both you and the bank.
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Time Limit – Banks usually allow installments over a short period (3–6 months), not years.
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Default Risk – If you miss any installment, the settlement can get cancelled and the bank may restart full recovery proceedings.
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Credit Score Impact – Even an installment-based settlement will be reported as “settled” (not “closed”) in your CIBIL report, which may affect future loans.
Yes, you can ask for installment-based settlement. Banks prefer lump-sum recovery, but if you show genuine financial hardship and commitment, many lenders agree to installment settlements. Just make sure everything is documented in writing to avoid future disputes.
By Advocate BK Singh
Supreme Court | High Court | Tribunals
