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The Collection Settlement Letter is a crucial document in Indian debt recovery practice, used when a creditor and debtor have reached an agreement to settle an outstanding debt for less than the full amount owed or under modified terms. This document, governed by Indian contract law and banking regulations, serves as official documentation of the settlement terms and provides legal protection for all parties involved. The letter typically includes detailed information about the original debt, the agreed settlement amount, payment terms, and conditions for satisfaction of the debt. It's particularly important in the Indian legal context as it can be used as evidence in debt recovery tribunals and courts if disputes arise later. The Collection Settlement Letter should comply with RBI guidelines on fair practices for lenders and debt collection, while also adhering to the requirements of the Indian Contract Act, 1872, and other relevant financial regulations.

1. Creditor Details: Full legal name and contact information of the creditor/collection agency

2. Debtor Details: Full legal name and contact information of the debtor

3. Date: Current date and any relevant reference numbers

4. Original Debt Information: Details of the original debt including account number, original creditor, and initial amount

5. Current Debt Status: Current outstanding amount including any interest and fees

6. Settlement Amount: Clear statement of the agreed settlement amount

7. Payment Terms: Specific payment amount, due date, and payment method

8. Settlement Conditions: Clear conditions that must be met for the settlement to be valid

9. Release Statement: Statement confirming that payment of the settlement amount will satisfy the entire debt

10. Signature Blocks: Space for both parties to sign and date the letter