What is the ideal debt-to-income ratio in India?

There is no ideal debt-to-income (DTI) ratio since each business is different, and there is no specific DTI ratio that will apply to all businesses within India. Usually, lenders have different lending standards for all businesses. However, most lenders will prefer borrowers that have a DTI ratio that shows the business uses less than 40% of gross monthly income to pay off debts. This should indicate that the business still has enough income to make the new loan instalments, in addition to having sufficient operating costs.

Any DTI ratio that is greater than 40% will likely reflect a level of debt ($) to which the business relies upon borrowed funds to operate. The higher the DTI ratio, the more hesitant lenders will be too making any further payments towards debts. If your DTI ratio is significantly high, there may be a greater chance that a lender will not approve your loan application at all.