Business
The Real Difference Between Loan Closure And Settlement That Banks Don’t Explain
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During repayment, two terms often confuse borrowers — loan closure and loan settlement. Both sound like the same thing: paying off the loan. But they’re not.
The impact is long-term. Your credit score takes a significant hit, and banks classify you as a risky borrower (Image: Canva)
In today’s world, loans have become part of life — whether it’s buying a house, a car, funding education, or even managing a wedding. Getting a loan feels easy and rewarding when the amount hits your account, but the real challenge begins when the monthly EMI cycle starts. Most people plan extensively before taking a loan, but not nearly enough when it comes to repaying it smartly.
During repayment, two terms often confuse borrowers — loan closure and loan settlement. Both sound like the same thing: paying off the loan. But they’re not. The difference between them can decide how healthy your credit score looks in the years to come.
What Loan Settlement Really Means
Imagine you take a loan of Rs 1 lakh but, due to financial strain, can’t keep up with your EMIs. You go to the bank and say, “I can’t pay the full amount. Take Rs 70,000 and close my loan.” The bank, realizing it might not get more, agrees and marks your account as settled.
You may feel relieved, but this settlement comes at a cost — your credit health. The bank writes off the remaining Rs 30,000, but your credit report (CIBIL) will clearly show the loan as settled, not closed. In the eyes of future lenders, this means you didn’t pay back what you owed in full.
The impact is long-term. Your credit score takes a significant hit, and banks classify you as a risky borrower. The next time you apply for a home loan or car loan, lenders may hesitate or approve it at a much higher interest rate. What looked like a quick fix can become a financial roadblock for years.
What Proper Loan Closure Looks Like
Loan closure is the clean way out. It simply means you repay every rupee you borrowed — the principal plus all the interest — till the end of your loan term. You can do this by continuing your regular EMIs until the loan tenure ends, or by prepaying the outstanding balance early (called foreclosure). Either way, the bank will mark your account as closed once you’ve cleared everything.
After the loan is closed, the bank issues a No Objection Certificate (NOC) or Loan Closure Letter. This document is proof that you’ve fulfilled your repayment responsibility. When lenders see a closed loan in your credit report, they recognize you as a disciplined, low-risk borrower. Your credit score improves, and future loans become easier and cheaper to access.
The Long-Term Difference Between the Two
The short-term benefit of a settlement (paying less) is quickly overshadowed by its long-term damage. In contrast, a closure might feel tougher in the moment but rewards you in the long run.
| Aspect | Loan Settlement | Loan Closure |
| What happens | Partial payment accepted by bank | Full repayment of loan and interest |
| Credit Report | Marked as “Settled” | Marked as “Closed” |
| Effect on Credit Score | Sharp drop (negative impact) | Positive impact |
| Future Loans | Difficult to get or higher interest | Easier, lower interest |
| Documents | None or settlement letter | NOC or closure certificate |
What You Should Do if You Can’t Pay
If your finances are tight, don’t rush to request a settlement. That’s like putting a permanent dent in your financial credibility. Instead, approach your bank and ask about loan restructuring.
Many banks offer flexible repayment plans — extending your tenure, reducing EMIs, or offering short-term relief until your income stabilizes. This way, your credit score remains protected.
You can also consider using your savings, investments, or even selling idle assets to repay your loan completely. Once you clear the full amount, your credit profile becomes stronger, not weaker.
Why It Matters More Than You Think
Your credit score isn’t just about loans — it’s your financial identity. A single “settled” loan entry can affect your chances of getting credit cards, housing finance, or even business funding. On the other hand, a “closed” loan builds trust with banks and signals that you’re financially responsible.
It’s easy to get tempted by shortcuts when the EMI burden feels heavy. But remember, financial decisions made in crisis can echo for years. The smarter move is to plan ahead, restructure wisely, and aim for closure — not settlement.
The News Desk is a team of passionate editors and writers who break and analyse the most important events unfolding in India and abroad. From live updates to exclusive reports to in-depth explainers, the Desk d…Read More
The News Desk is a team of passionate editors and writers who break and analyse the most important events unfolding in India and abroad. From live updates to exclusive reports to in-depth explainers, the Desk d… Read More
October 31, 2025, 11:03 IST
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NEW DELHI: The new nuclear energy bill, which was passed in Rajya Sabha by voice vote after a four-hour discussion while rejecting many amendments moved by opposition to send it to a parliamentary panel for scrutiny, marks a decisive shift in India’s nuclear governance, embedding safety oversight in law across the lifecycle of an atomic plant, unlike the existing framework that relied largely on executive discretion and post-accident accountability.Sustainable Harnessing of Nuclear Energy for Transforming India (SHANTI) Bill will allow private participation in India’s tightly controlled civil nuclear sector as the country seeks to meet its clean energy goals by 2047. As opposition raised safety and liability concerns, officials said it establishes a statutory safety regime that ensures continuous compliance rather than reliance on one-time permissions. It seeks to provide for a “pragmatic civil liability regime for nuclear damage and confer statutory status to Atomic Energy Regulatory Board (AERB)”.Officials said unlike the previous law – in which nuclear safety oversight was shaped largely by broad executive authority and administrative rules – SHANTI fundamentally recasts the framework by shifting to a “statutory, lifecycle-based regulatory regime”. Govt manages radiation risks and radioactive waste, but does not mandate separate safety authorisations or legally bind safety obligations to each phase of a nuclear plant’s life. AERB’s stage-wise consent process for construction, commissioning and operation existed only as an administrative practice. Civil Liability for Nuclear Damage (CLND) Act, 2010 further reinforced a post-accident approach by focusing on compensation and insurance rather than prevention.“These laws (Atomic Energy Act and CLND Act) treated safety primarily as a post-damage responsibility, rather than a proactive governance requirement,” said an official. SHANTI separates “permission to operate” from “permission to operate safely”, requiring both a licence and an independent safety authorisation. Any activity involving radiation exposure risk – including construction, operation, transport, storage, decommissioning, or waste management – will now require explicit safety approval.It also consolidates regulation, enforcement, civil liability and dispute resolution within a single statute, reducing legal complexity and compliance uncertainty. “It grants a clear statutory authority to AERB to inspect facilities, investigate incidents, issue binding directions, and suspend or cancel operations that do not meet safety standards. Regulatory action is no longer dependent on executive discretion. Accident prevention is significantly enhanced by legally recognising serious risk situations as nuclear incidents, even without actual damage,” said the official. Core functions such as fuel enrichment, spent-fuel reprocessing, and heavy water production will remain exclusively under Centre’s control.Anujesh Dwivedi, partner at Deloitte India, said continuing with the existing legal framework would make it difficult for nuclear energy to replace thermal power in the long run. “Over decades, India added only about 8GW of nuclear capacity. Scaling this up to 100GW by 2047- and potentially 300GW or more by 2070 – required major reforms, which these regulations seek to address,” he said.Meanwhile, PM Modi said passing of the bill marks a “transformational moment for our technology landscape”.
American Airlines
Grant Baldwin | Getty Images
American Airlines customers flying on basic economy fares will no longer earn frequent flyer miles or points toward elite status, the carrier said this week.
“We routinely evaluate our fare products to remain competitive in the marketplace. Customers who purchase a Basic Economy ticket on December 17, 2025 and beyond will not earn AAdvantage miles or Loyalty Points towards AAdvantage status,” it said. “Basic Economy customers will continue to receive one free personal item and one free carry-on bag, free snacks, soft drinks and in-flight entertainment.”
Elite loyalty members will still be eligible for first-class upgrades on domestic flights if they’re on basic economy tickets, an American spokeswoman told CNBC.
Basic economy tickets are airlines’ cheapest but most restrictive fares, rolled out across the industry over the past decade. Generally, they do not allow customers to change their tickets without fees or pick their seats in advance.
The move comes as airlines across the board have been chasing customers who are willing to spend more to fly. American has fallen behind large rivals Delta Air Lines and United Airlines in the post-Covid luxury travel boom.
American’s change, posted earlier by X user JonNYC, follows a similar policy by competitor Delta Air Lines, which said travelers on its Delta Main Basic, or basic economy tickets, wouldn’t receive Delta SkyMiles.
United Airlines does allow its MileagePlus loyalty program members to earn miles on basic economy tickets, but it has a different limitation: Basic economy customers on most flights aren’t allowed to bring a carry-on bag.
American had the same restriction after it launched basic economy fares but backpedaled in 2018.
Southwest Airlines this year launched its first no-frills basic fares that stipulate those customers will board last and get a seat assignment at check-in and earn miles at a lower rate than more expensive fares.
Business
Space funding surge: India’s private space sector raises $150 million so far this fiscal, says INSPACe chief – The Times of India
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The Chiefs had actually been teetering well before they finally fell
SHANTI shields N-plants from safety oversight: Experts – The Times of India
American Airlines no longer lets basic economy flyers earn miles
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