Closure of limits refers to process of cancelling or closing sanctioned credit limits after repayment, takeover, expiry, borrower request, or bank decision. It requires verification of outstanding dues, security release, documentation, and system updation. In MSME underwriting, it helps the bank understand the nature of the requested or existing facility, the repayment route, the security expectations and the conditions that must be tracked after sanction. For example, a term loan, cash-credit limit or guarantee facility can have different repayment, security, pricing and monitoring requirements even for the same borrower. This matters because product structure affects cash-flow assessment, limit sizing, pricing, documentation and monitoring frequency. The common mistake is to look only at the sanctioned amount while ignoring tenor, utilisation behaviour, repayment cycle, renewal terms and closure conditions.