How AU Small Finance Bank evaluates a settlement proposal

AU Small Finance Bank's recovery workflow runs through moderate-high — centralised committee. Committees benchmark every proposal against realisable value under SARFAESI, the age of NPA and AU SFB's internal sacrifice matrix. Below is the exact stage-by-stage playbook for a AU Small Finance Bank settlement — with who acts, how long each stage takes, and the AU SFB-specific behaviour at that stage.

End-to-end AU SFB settlement process

1
NPA classification
Account crosses 90-day overdue; system-marked sub-standard.
Bank system (auto) · Day 90
2
Reminder & collection
Telephonic + written reminders; recovery agency assigned for retail.
Collections / recovery cell · Day 90–150
3
Demand notice (13(2))
SARFAESI Section 13(2) demand notice issued; 60-day cure period starts.
Bank's authorised officer · Day 150–210
4
OTS proposal filed
Borrower files written OTS proposal with financial justification and source-of-funds plan.
Borrower / advisor · Any time after NPA
5
Internal review
Recovery cell prepares committee note: outstanding, security value, sacrifice, comparable settlements.
Recovery officer · 10–25 days
6
Negotiation rounds
2–4 rounds of counter-offers; borrower may be called for committee interaction.
Recovery committee · 15–30 days
7
OTS sanction letter
AU Small Finance Bank sanction letter carries a 30–45 day payment window.
Sanctioning authority · 3–7 days post-committee
8
Payment
Borrower pays as per sanction — usually lump sum or 2–3 tranches within validity.
Borrower · 60–150 days
9
NOC & security release
No Objection Certificate issued; mortgage / hypothecation released; original documents returned.
Bank (release cell) · 15–30 days post-payment
10
CIBIL update to 'Settled'
Bank reports status 'Settled' to all bureaus in the next reporting cycle.
Bank credit-reporting · 30–45 days post-NOC

AU Small Finance Bank sanctioning matrix — who approves what

AU Small Finance Bank's approval hierarchy determines both the discount ceiling and the timeline. Filing at the wrong tier is the single biggest reason AU SFB OTS proposals stall.

Authority	Exposure limit	Timeline	Decision criteria
Collections / Recovery Agent Team	Up to ₹5 lakh (unsecured)	3–10 days	Age bucket, prior EMIs, provision status
Recovery / Legal Cell — Deputy Head	₹5 lakh – ₹50 lakh	10–25 days	Written-off matrix, dispute risk
Regional Settlement Committee	₹50 lakh – ₹5 crore	20–40 days	Realisable security value, ageing, provision
Central Settlement Committee — CFO / CRO chaired	₹5 crore – ₹25 crore	30–60 days	Recoverable value vs ARC bid, litigation exposure
Board Risk / NPA Committee	Above ₹25 crore	45–90 days	Enterprise view + investor disclosure risk

AU SFB settlement timeline

Case assessment· 1–3 days

Statement + SARFAESI stage review

Proposal drafting· 5–10 days

AU Small Finance Bank format with sacrifice justification

Regional committee review· 20–35 days

1–3 rounds

Committee sanction· 5–15 days

45-day payment window

Payment· 45 days

NOC + CIBIL· 30 days post-payment

Common AU SFB rejection reasons — and how to fix them

Aggressive first offer

Why AU SFB rejects: AU Small Finance Bank's committee benchmarks against realisable value

Fix: Anchor at 55–65% of principal for secured with fresh valuation

Weak source-of-funds plan

Why AU SFB rejects: Committee discounts unsupported source claims

Fix: Attach audit-trail funding — loan sanction, sale MoU or bank statement

Wilful default flag

Why AU SFB rejects: RBI Master Direction 2024 needs additional Board approval

Fix: Contest classification separately

Missing hardship narrative

Why AU SFB rejects: Committee note requires a 'why'

Fix: 1–2 page written narrative with dated events

Documentation gaps

Why AU SFB rejects: Committee cannot decide on incomplete file

Fix: Submit complete file at filing

AU SFB product-specific settlement timelines

Product	Typical settlement	Timeline
AU Wheels — Car / CV / Tractor	50–72% of outstanding	25–55 days
AU Secured Business Loan (SBL)	55–75%	75–140 days
AU Home Loan	60–75%	75–140 days
AU Personal Loan	30–52%	30–60 days
AU Micro / SME Loan	45–68%	60–120 days
AU Working Capital	48–68%	75–140 days
AU LAP	55–72%	80–140 days
CC (SME)	48–68%	75–140 days
AU Overdraft	42–62%	45–85 days
AU Education Loan	38–58%	60–120 days
AU Credit Card	28–48%	30–55 days

AU SFB case studies — anonymised timelines & outcomes

Live examples of the AU SFB process working end-to-end — same stages as above, mapped to real timelines, discounts and committee outcomes. Client details are anonymised.

Case AUB-24-0143

Wheels — commercial vehicle

Jaipur

40%

discount

Outstanding

₹14.2 lakh

Settled at

₹8.5 lakh

Timeline2 months

Challenge:: Vehicle repossessed, auction in 20 days
Strategy:: Pre-auction OTS at 60% + fresh valuation
Outcome:: Sanctioned; vehicle released

Case AUB-24-0298

Secured Business Loan

Ahmedabad

37%

discount

Outstanding

₹64 lakh

Settled at

₹40 lakh

Timeline4 months

Challenge:: 13(2) issued, cashflow collapse
Strategy:: Regional SARB OTS at 63% principal
Outcome:: Sanctioned

Case AUB-23-0409

Home loan

Udaipur

31%

discount

Outstanding

₹42 lakh

Settled at

₹29 lakh

Timeline4 months

Challenge:: SMA-2, business income loss
Strategy:: OTS at 69% principal
Outcome:: Sanctioned pre-13(4)

Client names and identifying details are anonymised. Amounts rounded. Outcomes reflect approved AU SFB settlements handled by NPA Experts and do not guarantee similar results — every case turns on documentation and committee discretion.

Why cases like these get rejected at AU SFB

Even a clean process fails when these AU SFB-specific gaps surface at committee review. Address them before your OTS is tabled.

Aggressive first offer
Why AU SFB rejects: AU Small Finance Bank's committee benchmarks against realisable value
How to fix: Anchor at 55–65% of principal for secured with fresh valuation
Weak source-of-funds plan
Why AU SFB rejects: Committee discounts unsupported source claims
How to fix: Attach audit-trail funding — loan sanction, sale MoU or bank statement
Wilful default flag
Why AU SFB rejects: RBI Master Direction 2024 needs additional Board approval
How to fix: Contest classification separately
Missing hardship narrative
Why AU SFB rejects: Committee note requires a 'why'
How to fix: 1–2 page written narrative with dated events
Documentation gaps
Why AU SFB rejects: Committee cannot decide on incomplete file
How to fix: Submit complete file at filing

AU SFB settlement process — city coverage

Deep-dive city hubs for AU Small Finance Bank settlement process. Every link uses the same AU SFB + city anchor pattern so search engines can map our coverage: