NPA Resolution & Settlements · Question

How do I tell the lender I cannot repay without making things worse?

Short answer

Tell them early, in writing and in person, with facts rather than apologies or excuses. Explain what caused the difficulty, show where the business stands today, state what you can pay and when, and ask for a meeting to discuss options. Lenders respond better to a prepared borrower who stays in contact than to silence or last-minute pleas.

In more detail

Fear of making things worse usually pushes borrowers to delay. In practice, the lender is already seeing missed payments; what it does not yet know is why, and whether you are engaged. Your first conversation answers both.

Prepare four short pieces before you call or write. First, the cause: a plain account of what went wrong, such as a delayed customer payment, a lost contract or a cost shock, with dates. Second, your current position: stock, receivables, order book and cash on hand, honestly stated. Third, capacity: what you can pay now, and what you could pay on a realistic schedule. Fourth, the ask: a meeting to discuss a structured way forward, not a demand for waiver of dues.

Open with the message, not the justification. For example, say that you expect to miss the coming instalment, explain the reason in a couple of sentences, and propose a meeting with figures. Follow up with a short email confirming what was discussed.

Things that tend to make matters worse:

Promising amounts or dates you cannot meet, which damages trust faster than the original delay.
Contradicting yourself between conversations or between documents.
Blaming the lender or its staff, even where you feel there was a lapse.
Handling the conversation only through informal calls with no written record.

If personal guarantors or co-borrowers are involved, keep them informed so no one is surprised by notices. Consider speaking to a qualified advisor before the meeting, particularly on legal rights and obligations. A lender decides how to respond, and no approach guarantees an outcome, but a calm and credible start leaves more options open.

Key points

Contact the lender before further defaults pile up, in writing and in a meeting.
Prepare cause, current position, repayment capacity and a clear request.
Only commit to amounts and dates you can honestly meet.
Confirm every conversation by email so there is a written record.
Keep guarantors and co-borrowers informed so notices do not surprise them.

Who this applies to

Borrowers who expect to miss an instalment or have already done so.
Promoters nervous about the first conversation with the lender's recovery team.
Finance heads preparing a structured note for the lender.

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.