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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Debt Management and Loans

Mr. Rohan Mehta earns a gross monthly income of Rs 1,00,000 and pays total monthly EMIs of Rs 30,000 on existing loans. He wants to take another loan with an EMI of Rs 10,000. If a lender follows a maximum Fixed Obligation to Income Ratio (FOIR) of 45% of gross monthly income, what is the position?

Rohan is eligible. His total obligations after the new loan would be Rs 40,000 (existing Rs 30,000 plus new Rs 10,000), which is 40% of Rs 1,00,000 gross income. This is within the 45% FOIR limit set by the lender.

  1. AEligible, since total obligations after the new loan would be 40%Correct
  2. BNot eligible, since total obligations after the new loan would be 40% which exceeds the limit
  3. CNot eligible, since the new EMI of 10% alone exceeds the limit
  4. DEligible, since total obligations after the new loan would be 30%

Explanation

Total obligations after the new loan = 30,000 + 10,000 = Rs 40,000. FOIR = 40,000 / 1,00,000 = 40%. This is below the 45% cap, so he is eligible. Option 3 ignores the new EMI, and option 2 wrongly says 40% exceeds 45%.

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