Arpit Chawla, the CEO of Paisabazaar, said on July 10 that lenders now weigh the Fixed Obligation to Income Ratio (FOIR) as a primary lever for loan decisions.
The ratio caps a borrower's total monthly debt—existing EMIs plus the new loan—at no more than 55% of net income. A borrower earning Rs. 1 lakh per month with an existing EMI of Rs. 15,000 can comfortably carry an additional loan of up to Rs. 40,000, whereas the same borrower with a Rs. 55,000 EMI faces an almost impossible approval window.
Chawla stressed that income quality matters too: salaried workers in large multinationals or government sectors enjoy higher approval rates, while those in start‑ups or volatile industries see stricter scrutiny. Self‑employed professionals rely on audited financials, and freelancers face tighter documentation requirements.
A strong credit score still trumps income in many cases, but lenders weigh it against FOIR and repayment capacity. Paisabazaar predicts that RBI’s upcoming policy revision on October 1 will formalise the 55% rule, urging borrowers to tighten debt before the deadline.