NPA Resolution & Settlements · Question

Who decides whether a settlement offer is accepted inside a bank?

Short answer

Not the officer you talk to. A settlement is normally recommended by the recovery or stressed-asset team and approved by a sanctioning authority or committee whose level depends on the size of the dues and the amount the lender would give up. Larger or more complex cases go to higher committees, and the lender's board policy sets the limits.

In more detail

Every lender operates under a board-approved policy for recovery and compromise settlements, within the framework of regulatory guidance. That policy fixes who may approve what, so decisions are never left to one person's discretion.

A typical path looks like this. The branch or account officer receives your proposal and passes it to a specialised recovery or stressed-asset unit. That unit checks the file: the outstanding amount, the security and its current value, your conduct, the reasons for stress and the realism of your offer. It then prepares a note with its recommendation.

The note goes to an approving authority. Smaller cases can be cleared by a senior officer at a regional or zonal level; larger cases go to a committee at head office, and the biggest may need approval at a higher committee level or the board. The decision level generally rises with the size of the dues and the sacrifice, meaning the portion of the claim the lender would not recover.

Factors that influence the committee include:

the lender's estimate of what it could recover through enforcement, and how long that would take
how your offer compares to the realisable value of security
evidence of genuine inability to pay rather than unwillingness
whether funds come from verifiable sources and are paid up front or soon
the account's classification stage and the lender's provisioning position

Ask about the approval route

Politely ask the recovery officer which authority will consider your case and what documents the committee note needs. Knowing the route helps you submit complete material at the right time.

Because the committee works from the written note, a clear and well-documented proposal presents your case clearly. The decision remains the lender's, and no settlement is assured.

Key points

A settlement is approved by a delegated authority or committee, not by the officer you meet.
The approval level typically rises with the size of dues and the sacrifice involved.
Recovery teams prepare a note with a recommendation based on your documents and conduct.
Committees weigh recovery prospects, security value, your evidence and the source of funds.
Ask which route your case will follow and what the committee note requires.

Who this applies to

Borrowers who have made a settlement proposal and want to understand the process.
Finance heads preparing documents for a credit committee note.
Guarantors following the progress of a negotiation.

Last reviewed 3 October 2026

This answer is general information, not advice on your particular case. Terms, eligibility, and requirements change, so check the current position with the relevant institution or authority. Lalsar Holdings' financial advisory and financing work is advisory and facilitation only. Lalsar Holdings is not a lender. Sanction and disbursement of any credit facility is at the sole discretion of the partner bank, NBFC, or financial institution involved, subject to their own eligibility criteria and credit policy.