What is FOIR?

FOIR (Fixed Obligations to Income Ratio) is a difference between the net monthly income and all of the assured financial liabilities a person holds including the EMIs of the loan that he/she have just applied.

As per Banks’ guidelines, a borrower can only lend from 45% to maximum 75% of their current net income so a person can manage his debt requirements as well as living expenses. The fixed liabilities analysed for the calculation of FOIR includes expenses for food, rent, transportation, utility and water bills etc. which is essential for living. And by using this guideline, the banks and financial institutions calculate how much loan can be offered to a borrower without being at risk. The higher your FOIR is, the higher loan amount you can get in respect of your monthly income.

How to Calculate FOIR?

FOIR Calculation

Calculating FOIR is simple. All you need to know is your net monthly income and the all of your fixed obligations including the monthly instalment of the proposed loan. Firstly, total the sum of all of your obligations including proposed EMI. Then, multiply by it 100 and divide by your net monthly income. The outcome will be a percentage figure, which is your current FOIR and you can avail the loan against only that much portion of your income.

However, to improve your calculation, you need to understand exactly what components of your income are considered when it comes to net monthly income. Such as, for salaried borrowers, the TA and DA are excluded when net monthly salary is calculating.

How to Improve FOIR?

Include Rental Income

In case you are earning any additional income by renting out your property to someone, then you can include it in your net monthly income to increase your FOIR and be eligible for comparatively higher loan amount. However, if you do so, you must provide the proof of rental income along with regular income documents.

Include Co-Applicant

If you don’t have any additional income but still wants to be eligible for a higher loan amount than what you are currently eligible for, then you should consider including a co-applicant to your loan.

If loan is being taken against a security such as home loans, then every owner of the property must be a co-borrower in the loan. In case of other type of loan such as unsecured personal loan, the co-applicant can be any one of your close family member as long as the person have a sufficient and regular source of income. It can be your spouse, father, unmarried brother, unmarried children. However, it is important to know that co-applicant must not be a minor.

In case of you are making your spouse a co-applicant, then she must have a regular source of income other than rental income of the spouse is not considered for eligibility.

Pay Existing Debt

Even if including your rental income doesn’t suffice to avail the loan amount as per your requirements, then you can simply pay-off some of your existing debts either by prepayment facility or by increasing EMI amount if bank/FI allow to do so. By paying off some of your existing debt, reduced the total amount of current fixed obligations which will result in high FOIR.

MCLR Rate

MCLR is introduced by RBI, to the banks and financial institutions, in order to help them decide interest rates for loans on the basis of the current lending rate (repo rate) as defined by the RBI from time-to-time. It represents the minimum interest rate criteria of a bank below which the bank cannot lend except in some exclusive cases where RBI allows the banks/FIs to do so. Based on the current mclr, a bank decide the minimum lending rate for their loan products, be it personal loan, home loan, car loan or education loan etc.

The primary reason to introduce MCLR rate is to make the lending rate of the banks/financial institution more transparent for a borrower and link borrowers to the benefits of repo rate. Earlier, interest rates were linked to Base rate which used to create a layer on how banks/FIs calculate the interest rates for a borrower.

The current interest of any type of loan or credit limit it linked to MCLR. Hence, by knowing the current MCLR of a bank or financial institutions, the borrowers can calculate the minimum interest rates of the bank especially in case of floating rate loans.

HDFC Bank MCLR Rates

TenureMCLR Rates
Overnight8.20%
1 Month8.20%
3 Months8.30%
6 Months8.40%
1 Year8.60%
2 Years8.70%
3 Years8.85%

SBI Bank MCLR Rates

TenureMCLR Rates
Overnight7.90%
1 Month7.90%
3 Months7.95%
6 Months8.10%
1 Year8.25%
2 Years8.35%
3 Years8.45%

ICICI Bank MCLR Rates

TenureMCLR Rates
Overnight8.55%
1 Month8.55%
3 Months8.60%
6 Months8.75%
1 Year8.80%

Axis Bank MCLR Rates

TenureMCLR Rates
Overnight8.40%
1 Month8.40%
3 Months8.55%
6 Months8.70%
1 Year8.80%
2 Years8.90%
3 Years8.95%

Yes Bank MCLR Rates

TenureMCLR Rates
Overnight8.25%
1 Month8.90%
3 Months9.45%
6 Months9.55%
1 Year9.70%

Indusind Bank MCLR Rates

TenureMCLR Rates
Overnight9.35%
1 Month9.40%
3 Months9.70%
6 Months9.85%
1 Year9.90%
2 Years10%
3 Years10.05%

Capital First MCLR Rates

TenureMCLR Rates
Overnight8.60%
1 Month8.60%
3 Months8.80%
6 Months9%
1 Year9.25%
2 Years9.35%
3 Years9.5%

Citibank MCLR Rates

TenureMCLR Rates
Overnight8.45%
1 Month8.65%
3 Months8.70%
6 Months8.80%
1 Year8.80%

Kotak Mahindra Bank MCLR Rates

TenureMCLR Rates
Overnight8.30%
1 Month8.35%
3 Months8.60%
6 Months8.80%
1 Year9%
2 Years9.05%
3 Years9.05%

Standard Chartered Bank MCLR Rates

TenureMCLR Rates
Overnight8.40%
1 Month9.05%%
3 Months9.40%
6 Months9.40%
1 Year9.60%
2 Years9.95%
3 Years10%

PNB MCLR Rates

TenureMCLR Rates
Overnight8.05%
1 Month8.10%
3 Months8.15%
6 Months8.35%
1 Year8.45%
3 Years8.65%

Bank of Baroda MCLR Rates

TenureMCLR Rates
Overnight8.25%
1 Month8.30%
3 Months8.40%
6 Months8.60%
1 Year8.65%

IDBI Bank MCLR Rates

TenureMCLR Rates
Overnight7.95%
1 Month8.25%
3 Months8.45%
6 Months8.65%
1 Year9.05%
2 Years9.30%
3 Years9.30%

RBL Bank MCLR Rates

TenureMCLR Rates
Overnight9.45%
1 Month9.50%
3 Months9.75%
6 Months9.95%
1 Year10.25%
2 Years10.50%
3 Years10.60%

Bank of India MCLR Rates

TenureMCLR Rates
Overnight8.20%
1 Month8.30%
3 Months8.45%
6 Months8.60%
1 Year8.65%

Bandhan Bank MCLR Rates

TenureMCLR Rates
Overnight10.30%
1 Month10.32%
3 Months10.36%
6 Months10.39%
1 Year10.45%
2 Years10.78%
3 Years10.86%

Federal Bank MCLR Rates

TenureMCLR Rates
Overnight8.75%
1 Month8.85%
3 Months9%
6 Months9.1%
1 Year9.2%

Indian Bank MCLR Rates

TenureMCLR Rates
Overnight8.10%
1 Month8.25%
3 Months8.45%
6 Months8.55%
1 Year8.65%

Andhra Bank MCLR Rates

TenureMCLR Rates
Overnight8.20%
1 Month8.25%
3 Months8.45%
6 Months8.60%
1 Year8.75%

Corporation Bank MCLR Rates

TenureMCLR Rates
Overnight8.10%
1 Month8.25%
3 Months8.55%
6 Months8.90%
1 Year8.95%

Syndicate Bank MCLR Rates

TenureMCLR Rates
Overnight8.20%
1 Month8.30%
3 Months8.45%
6 Months8.60%
1 Year8.65%

HSBC Bank MCLR Rates

TenureMCLR Rates
Overnight8.30%
1 Month8.30%
3 Months8.60%
6 Months8.85%
1 Year9.05%

MCLR vs. Base Rate

  • The primary difference in MCLR and Base Rate is that the base rate is mainly linked to the marginal profit of the bank, whereas MCLR rate is mainly link to the marginal cost of funds.
  • MCLR is linked to repo rate which is being controlled by the RBI unlike base rate which were controlled by the banks/FIs itself. So, if the RBI decides to lower the repo rate, interest rates linked to MCLR would go also become cheaper to the borrower as compared to base rate where the borrower would have still be paying the same amount.

How to Calculate MCLR Rates?

Since, MCLR rate is linked to the four main factors, marginal cost of funds, tenure premium, operational cost, and negative carry on cash reserve ratio account. A borrower can understand MCLR rate by knowing these four factors. Although, banks and financial institutions publish their mclr rates each quarter.

Marginal Cost of Funds

Marginal cost of funds is calculated based on two elements, majority of marginal cost of the loan amount, and portion of return on the net-worth. The marginal cost of funds can be calculated using a simple formula, given below.

  • Marginal cost of funds = (92% of the Marginal cost of borrowings) + (8% of the Return on networth)

Operational Cost

Operation cost is what banks and financial institutions has to bear in order to raise the funds for lending. However, it doesn’t include the service charges being recovered by the borrower at the time of loan processing.

Tenure Premium

Banks and Financial institutions calculate interest rates based on the periodic mclr rates which is further calculated based on the premium calculated for a certain period of time. It can be overnight, 1 month, 3 months, 6 months, 1 month and any period of more than 1 year which bank seems fit as per their lending process. The tenure premium tends to be same for all kind of loans for a given period.

Negative Carry on Cash Reserve Ratio

The negative carry on cash reserve ratio is the difference between actual cash reserve ratio and the negative carry on the mandatory cash reserve ratio. This situation happens if the return on loan amount is zero, and affects mandatory Statutory Liquidity Ratio Balance (SLR).

Based on these four main components, a borrower can understand how a bank or financial institution struct their MCLR rates for any period of lending.

Interest Rates on Savings Account

The Interest rate provided on a savings account varies depending on which bank you are holding your savings. Moreover, the banks usually tends to provide 0.50% higher interest rate to senior citizens holding savings accounts in their banks, where sweep-out facility is applicable.

Apart from the banks, one can also open a savings account at any of the Indian Post office with interest rate earnings of 4% per annum.

Savings Account Interest Rate by Different Banks

BanksAnnual Interest Rates
HDFC Bank3.50%
For Account Balance less than Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs to less than Rs. 500 Crs. 
5.77%
For Account Balance above Rs. 500 Crs.
SBI3.00%
For Account Balance above Rs. 1 Lac 
3.50%
For Account Balance upto Rs. 1 Cr. 
4.00%
For Account Balance above Rs. 1 Cr.
ICICI Bank
Upto 7.50% under Saving Accounts with Money Multiplier Plan
3.50%
For Account Balance less than Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs
Axis Bank
Upto 7.10% under ASAP Instant Account
3.50%
For Account Balance less than Rs. 50 Lacs 
4.00%
For Account Balance Rs. 50 Lacs to less than Rs. 100 Crs. 
5.50%
For Account Balance above Rs. 100 Crs. to less than Rs. 200 Crs. 
6.00%
For Account Balance above Rs. 200 Crs and above.
Citibank4.00% – 4.50%
Standard Chartered Bank
Upto 7.10% under eSaver Account
3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs
YES Bank5.00%
For Account Balance upto Rs. 1 Lac 
6.00%
For Account Balance above Rs. 1 Lac to upto Rs. 1 Cr. 
6.25%
For Account Balance above Rs. 1 Cr to upto Rs. 100 Crs.
Kotak4.00%
For Account Balance upto Rs. 1 Lac 
6.00%
For Account Balance above Rs. 1 Lac to upto Rs. 1 Cr. 
5.50%
For Account Balance above Rs. 1 Cr
Canara Bank3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs
PNB
Upto 7.90% under PNB Shikshak Sweep Account
3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs
City Union Bank4.00%
Central Bank of India3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs
Bank of India
Upto 8.25% under BOI Savings Plus Account
3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs
Bank of Baroda
Upto 6.55% under Super Savings Account
3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs
Bank of Maharashtra3.50%
For Account Balance upto Rs. 25 Lacs 
4.00%
For Account Balance above Rs. 25 Lacs
IDBI Bank3.50%
For Account Balance upto Rs. 25 Lacs 
4.00%
For Account Balance above Rs. 25 Lacs
IDFC First6.00%
For Account Balance upto Rs. 1 Lac 
7.00%
For Account Balance above Rs. 1 Lac to upto Rs. 250 Crs. 
8.50%
For Account Balance above Rs. 250 Crs.
Indusind Bank4.00%
For Account Balance upto Rs. 10 Lacs 
5.00%
For Account Balance above Rs. 10 Lacs to upto Rs. 1 Cr. 
6.00%
For Account Balance above Rs. 1 Cr.
Bandhan Bank4.00%
For Account Balance upto Rs. 1 Lac 
6.00%
For Account Balance above Rs. 1 Lac to upto Rs. 10 Crs. 
6.55%
For Account Balance above Rs. 10 Crs. to upto Rs. 50 Crs. 
7.00%
For Account Balance above Rs. 50 Crs.
Federal Bank3.50%
For Account Balance less than Rs. 50 Lacs 
4.00%
For Account Balance Rs. 50 Lacs to less than Rs. 10 Crs. 
6.30%
For Account Balance Rs. 10 Crs. to less than Rs. 25 Crs. 
6.51%
For Account Balance Rs. 25 Crs. to less than Rs. 250 Crs. 
7.20%
For Account Balance of Rs. 250 Crs. and above.
Andhra Bank3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs
Allahabad Bank
Upto 6.25% under AllBank Shakti Saving Account & Upto 6.50% under AllBank Savi-fix Account
3.50%
For Account Balance less than Rs. 40 Lacs 
4.00%
For Account Balance of Rs. 40 Lacs and above
Indian Bank
Upto 6.50% under SB Platinum Account
3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs
Indian Overseas Bank3.50%
For Account Balance upto Rs. 25 Lacs 
4.00%
For Account Balance above Rs. 25 Lacs
RBL Bank5.50%
For Account Balance less than Rs. 1 Lac 
6.00%
For Account Balance Rs. 1Lac to upto Rs. 10 Lacs 
6.75%
For Account Balance Rs. 10 Lacs to upto Rs. 5 Crs.
Corporation Bank3.50%
For Account Balance less than Rs. 50 Lacs 
4.00%
For Account Balance of Rs. 50 Lacs and above.
Abhyudaya Cooperative Bank4.00%
Abu Dhabi Commercial Bank4.00%
OBC3.50%
Syndicate Bank3.50%
For Account Balance upto Rs. 25 Lacs 
4.00%
For Account Balance above Rs. 25 Lacs.
Union Bank of India
Upto 6.75% under Union Flexi Savings & Union Flexi Plus Savings Account
3.50%
For Account Balance upto Rs. 25 Lacs 
4.00%
For Account Balance above Rs. 25 Lacs.
United Bank of India3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs.
Punjab & Sind Bank3.50%
For Account Balance upto Rs. 20 Lacs 
4.00%
For Account Balance above Rs. 20 Lacs.
UCO Bank3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs.
Catholic Syrian Bank3.50%
For Account Balance less than Rs. 1 Lac 
4.00%
For Account Balance of above Rs. 1 Lac to upto Rs. 50 Lacs 
5.00%
For Account Balance of above Rs. 50 Lacs to upto Rs. 10 Crs. 
6.00%
For Account Balance of above Rs. 10 Crs. to upto Rs. 20 Crs. 
6.75%
For Account Balance of above Rs. 20 Crs.
DCB Bank4.00%
For Account Balance less than Rs. 1 Cr 
6.25%
For Account Balance of Rs. 1 Cr. to less than Rs. 5 Crs. 
6.50%
For Account Balance of Rs. 5 Crs. and above.
Dhanlaxmi Bank3.50%
For Account Balance upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs.
Jammu & Kashmir Bank3.50%
HSBC Bank3.50%
Karnataka Bank3.00%
For Account Balance upto Rs. 1 Lac 
3.50%
For Account Balance above Rs. 1 Lac to upto Rs. 50 Lacs 
4.00%
For Account Balance above Rs. 50 Lacs to upto Rs. 1 Cr. 
5.00%
For Account Balance above Rs. 1 Cr.
Karur Vysya Bank4.00%
Lakshmi Vilas Bank4.00%
For Account Balance upto Rs. 1 Lac 
5.25%
For Account Balance above Rs. 1 Lac to upto Rs. 5 Lacs 
6.25%
For Account Balance above Rs. 5 Lacs to less than Rs. 10 Crs. 
6.50%
For Account Balance of Rs. 10 Crs. and above.

How to Calculate Interest Rates on Savings Account?

The calculation of the interest rate on a savings account is done on a daily closing balance and paid into the account on a quarterly or half-yearly basis.

  • Daily Ending Balance is the total amount available in your savings account at the end of a day.
  • Rate of interest is as provided by the bank / post office.
  • 365 denotes the total number of days in a financial year. If it’s a leap year, then 366 is applicable in place of 365 for calculation.

If you’re holding a savings account with sweep-in and sweep-out facility, then the rate of interest applicable on excessive amount above the preset limit will be calculated based on the interest rate offered by the bank for fixed deposit based on the number of days the amount is being kept in the fixed deposit.

However, it comes with a limit and most of the banks offer maximum 180 days period for interest on excessive amount under sweep out facility.

Tax Deductions on Savings Accounts Interest Earning

The interest amount that you earn in your savings account is considered to be income from other sources, and any interest savings earned in a financial year is taxable.

However, a savings account holder can claim tax benefits of maximum Rs. 10,000 against total interest amount earned under Income Tax Section 80TTA.