Glossary
Debt settlement terms, explained simply
Banks and recovery agents use a lot of jargon. Here is what the most common terms actually mean.
C
- CIBIL score
- A three-digit credit score (300–900) from TransUnion CIBIL that lenders use to judge how reliably you repay. Other bureaus — Experian, Equifax and CRIF High Mark — have their own scores. Rebuilding your score
- Closed (credit report status)
- The account was repaid in full as agreed.
- Credit Information Company (CIC)
- A credit bureau licensed by the RBI to collect repayment data from lenders and produce credit reports and scores.
D
- Debt consolidation
- Taking one loan to repay several others, ideally at a lower interest rate, so you have a single EMI.
- Debt settlement
- An agreement in which a lender accepts less than the full outstanding to close an account, which is then reported to credit bureaus as “settled”. What is loan settlement?
- Digital lending app (DLA)
- A mobile app that offers loans. Under RBI rules it must disclose the regulated bank or NBFC that actually provides the loan.
- DPD (days past due)
- How many days a payment is overdue. Shown month by month on your credit report.
F
- Fair Practices Code
- RBI-mandated principles that lenders must follow in lending and recovery, including fair treatment of borrowers.
- FOIR
- Fixed Obligations to Income Ratio — the share of your monthly income that goes to EMIs and other fixed debt payments. EMI burden calculator
G
- Grievance Redressal Officer
- The official at a bank or NBFC who handles customer complaints. Your first point of escalation. Complaint letter generator
N
- No Dues Certificate (NOC)
- A letter from the lender, issued after final payment, confirming that nothing more is owed on the account.
- NPA
- Non-performing asset — a loan on which interest or principal has been overdue for more than 90 days, as classified by the lender.
O
- One-time settlement (OTS)
- A settlement where the agreed reduced amount is paid in a single payment. OTS guide
R
- RBI Integrated Ombudsman
- A free RBI complaint service for customers of regulated entities, available online at cms.rbi.org.in when a lender doesn’t resolve your complaint within 30 days.
- Recovery agent
- A person or agency engaged by a lender to collect overdue payments. The lender is responsible for their conduct under RBI rules. RBI rules for recovery agents
- Restructuring
- Changing a loan’s terms — for example a longer tenure or lower EMI — to make repayment manageable without settling. Usually better for your credit score than settlement.
S
- Settled (credit report status)
- Credit report status meaning the account was closed after the lender accepted less than the full amount. It lowers your score. Settled vs closed
- Settlement letter
- The lender’s written offer or sanction stating the settlement amount, payment dates and that the account will be closed on payment. Settlement letter checklist
T
- Term settlement
- A settlement where the agreed reduced amount is paid in a few instalments over a fixed period. Missing an instalment can cancel the deal.
U
- Unsecured loan
- A loan with no collateral, such as a credit card, personal loan or most app loans. These are the debts typically considered for settlement.
W
- Written-off
- The lender has recorded the dues as a loss in its books. It does not cancel the debt; the lender can still try to recover it.
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