What is FOIR?

FOIR = (total fixed monthly obligations / gross monthly income) x 100. Obligations include existing loan EMIs, the EMI of the loan under consideration and committed credit card payments; many lenders also count rent and insurance premiums. Discretionary spending and utilities are excluded.

A worked example: a borrower earning Rs 1,20,000 a month with a Rs 22,000 home loan EMI, Rs 8,000 car loan EMI and Rs 6,000 of committed card payments carries Rs 36,000 of fixed obligations. Adding a proposed Rs 15,000 EMI takes the total to Rs 51,000, so FOIR = 51,000 / 1,20,000 = 42.5 percent.

There is no general RBI prescribed FOIR cap for banks or NBFCs. Thresholds sit in each lender credit policy, and Indian industry practice typically clusters around 40 to 55 percent, stretched towards 65 to 70 percent for high income salaried borrowers. Treat these as convention, not regulation.

The exception is microfinance. The RBI Master Direction on the Regulatory Framework for Microfinance Loans, 2022 caps monthly loan repayment obligations of a household at 50 percent of monthly household income. The cap covers all outstanding loans of the household, microfinance and otherwise, and includes both principal and interest components.

Applications state the obligations the borrower chooses to declare. Bank statements show the debits that actually happen: app loan EMIs, BNPL repayments, informal borrowings and fresh disbursals that have not yet reached the bureau. Computing FOIR from categorised banking, cross checked against bureau tradelines, routinely surfaces a materially higher figure than the declared one, and that gap is itself an underwriting signal.

Fiscus computes dynamic FOIR three ways, debt based, including fixed expenses and including essentials, from categorised banking rather than declared figures. See bank statement analysis.