FOIR (Fixed Obligation to Income Ratio) is a key parameter used by banks and NBFCs (Non-Banking Financial Companies) to assess a personal loan applicant’s repayment capacity. It measures the proportion of your income that goes towards fixed obligations, such as existing EMIs and rent, in relation to your monthly income. A lower FOIR generally indicates a higher probability of loan approval.
Understanding FOIR (Fixed Obligation to Income Ratio)
FOIR is a financial metric that measures the proportion of your monthly income that goes towards fixed obligations such as existing loan EMIs, rent, and other recurring expenses. It helps lenders assess your repayment capacity by determining how much of your income is already committed to fixed payments and how much is available for new loan repayment.
How is FOIR Calculated?
Here’s the formula:
FOIR = (Total Fixed Obligations / Net Monthly Income) * 100
Components:
- Total Fixed Obligations: This includes any ongoing EMIs (for loans like home loans, car loans, etc.), rent, and other fixed monthly expenses.
- Net Monthly Income: This is your monthly income after taxes and other deductions.
Example:
If your fixed monthly obligations are ₹40,000 and your net monthly income is ₹1,00,000, your FOIR would be:
FOIR = (40,000 / 1,00,000) * 100 = 40%
This means that 40% of your income is already committed to fixed expenses.
The FOIR Requirement for Personal Loan Approval across Some Top Banks
| Bank | FOIR Requirement | Remarks |
|---|---|---|
| HDFC Bank Personal Loan | 40% - 50% | FOIR varies based on income and customer profile. |
| DBS Bank Personal Loan | 40% - 45% | Competitive FOIR; strong credit history is emphasized. |
| Axis Bank Personal Loan | 40% - 50% | FOIR may be more flexible for salaried professionals. |
| ICICI Bank Personal Loan | 40% - 45% | Prefer lower FOIR, with a strong focus on credit score. |
| Bank of Baroda (BOB) Personal Loan | 40% - 50% | FOIR may vary based on salary and existing obligations. |
| SBI Personal Loan | 40% - 50% | FOIR can be lower for higher income individuals. |
| IndusInd Bank Personal Loan | 40% - 45% | FOIR flexibility depending on income and credit profile. |
| Yes Bank Personal Loan | 40% - 50% | FOIR flexibility may be offered for high-income applicants. |
| Standard Chartered Bank Personal Loan | 40% - 45% | Competitive FOIR, with focus on maintaining good repayment history. |
| IDFC First Bank Personal Loan | 45% - 50% | Higher FOIR tolerance, especially for salaried individuals. |
| Kotak Mahindra Bank Personal Loan | 40% - 45% | FOIR more stringent for higher loan amounts. |
| Bandhan Bank Personal Loan | 40% - 50% | FOIR based on borrower’s income and repayment capacity. |
| Punjab National Bank Personal Loan | 40% - 50% | Flexible FOIR with leniency for government employees. |
The FOIR Requirement for Personal Loan Approval across Some Top NBFCs
| NBFC/Financial Institution | FOIR Requirement | Remarks |
|---|---|---|
| Piramal Finance Personal Loan | 50% - 55% | Higher FOIR tolerance, especially for salaried applicants. |
| Tata Capital Personal Loan | 50% | Flexible FOIR for salaried individuals with strong credit. |
| Shriram Finance Personal Loan | 50% - 55% | Allows higher FOIR for individuals with stable income. |
| InCred Personal Loan | 50% | FOIR based on credit score and monthly income. |
| Finnable Personal Loan | 50% - 55% | Higher FOIR permissible for salaried individuals. |
| Aditya Birla Personal Loan | 50% | Standard FOIR, flexible for salaried professionals. |
| PaySense Personal Loan | 50% - 55% | Higher FOIR allowed, especially for individuals with good repayment history. |
| Poonawalla Personal Loan | 50% - 55% | Allows higher FOIR for salaried borrowers with good credit. |
| Fullerton India Credit | 40% - 50% | FOIR depends on income profile and stability. |
| LendingKart Personal Loan | 50% | Higher FOIR permissible for salaried and self-employed individuals. |
| Axis Finance Personal Loan | 50% - 55% | FOIR varies with income and credit score. |
| Mahindra Finance Personal Loan | 50% - 55% | Higher FOIR allowed, particularly for salaried applicants. |
| Bajaj Finance Personal Loan | 50% - 55% | One of the most flexible FOIRs, especially for salaried professionals. |
| L&T Finance Personal Loan | 50% | Standard FOIR, can be flexible depending on credit history. |
Which Banks and NBFCs Allow FOIR up to 70%?
| Bank/NBFC | FOIR Limit | Remarks |
|---|---|---|
| Piramal Finance | Up to 70% | Flexible lending criteria based on borrower profile. |
| Bajaj Finance | Up to 70% | Lenient FOIR for existing customers with good credit. |
| Shriram Finance | Up to 70% | Higher FOIR for salaried professionals with stable income. |
| L&T Finance | Up to 70% | Competitive products; may accommodate higher FOIR. |
| Mahindra Finance | Up to 70% | Allows higher FOIR under certain conditions. |
| Aditya Birla Finance | Up to 70% | Flexible FOIR depending on financial stability. |
| Yes Bank | Up to 70% | High FOIR accepted for high-income earners. |
| Fullerton India Credit | Up to 70% | Higher FOIR for eligible borrowers based on profile. |
Which Banks and NBFCs Allow FOIR up to 80%?
| Bank/NBFC | FOIR Limit | Remarks |
|---|---|---|
| PaySense | Up to 80% | Higher FOIR for individuals with strong repayment capacity. |
| InCred | Up to 80% | Flexible approach, considering strong credit scores. |
| Finnable | Up to 80% | May allow higher FOIR based on applicant’s financial health. |
| LendingKart | Up to 80% | Focuses on small businesses; higher FOIR for eligible applicants. |
| Fullerton India Credit | Up to 80% | Allows higher FOIR for certain applicants based on profile. |
| Bajaj Finserv | Up to 80% | Offers competitive products with higher FOIR for qualified borrowers. |
| Home Credit | Up to 80% | Focused on personal loans with lenient FOIR criteria. |
Key Considerations
- Risk Assessment: Lenders willing to offer higher FOIRs typically conduct thorough assessments of the borrower’s overall financial health, credit history, and income stability.
- Credit Score Impact: A strong credit score can significantly improve your chances of securing a personal loan with a higher FOIR.
- Terms and Conditions: Be aware that while some lenders may allow higher FOIRs, they might also impose stricter terms, such as higher interest rates or additional documentation.
Conclusion
While securing a personal loan with a FOIR above 55% can be challenging, certain banks and NBFCs are open to considering higher ratios based on the applicant’s profile. It is advisable to check with individual lenders for their specific policies and requirements.
