Lease rental discounting (LRD) eligibility calculator
Banks lend against rent on the lowest of a few published tests: a share (often 75%) of the net rent receivable over the residual lease or the loan tenor, or a share of its present value; the loan the rent can repay; and a percentage of the property's value. Net rent means rent after TDS, property tax and other owner-borne outgoings, less any deposit. This calculator runs those tests month by month, with escalation, and shows which one limits the loan.
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The tests — the lowest applied one sets the loan
From gross rent to net rent
Year by year over the loan tenor
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How this is calculated
Net rent, month by month
Net rentm = gross rentm − TDS − (property tax ÷ 12 + maintenance + insurance ÷ 12)
- Gross rent rises by the escalation % in the month you enter and every N years after that.
- Loan tenor n = the lower of the lender's maximum and the residual lease (or the lock-in, if the lender counts only that).
- Deposit: a refundable security deposit or advance rent is deducted from the rent pool in tests (a) and (c), as SBI, Union and Central Bank do.
- TDS under section 393(1), Table sl. no. 2(ii) of the Income-tax Act, 2025 (formerly section 194-I) is 10% for land or buildings above ₹50,000 a month. It is credited against your income tax, so it is not a cost. Banks still deduct it because it is paid to the government, not into the escrow account. The timing matters too: you get the credit only when you file your return.
The four tests
- (a) Present value: loan = % × (Σ net rentm ÷ (1 + d)m − deposit), over the tenor, with d = discount rate ÷ 12. Indian Bank keeps a margin of 10% (category A tenants) or 20% on the present value of rent; Central Bank lends 95% of present value at 10%; PNB lends on the present value of net rent.
- (b) EMI cover: loan = EMI capacity × (1 − (1 + i)−n) ÷ i, where EMI capacity = x% × the first month's net rent and i = rate ÷ 12. The first month has the lowest rent, so a level EMI stays covered as rent escalates.
- (c) Share of total net rent: loan = k% × (Σ net rent over the lower of the residual lease and the tenor − deposit). SBI Rent Plus, Canara Rent and Union Rent use 75%; Central Bank 65%.
- (d) Property value: loan = LTV% × market value. SBI, Union and PNB (over five years) cap the loan at 75% of value; Indian Bank's 30% margin on realisable value gives 70%; Canara and Central Bank instead ask for security worth 100% and 150% of the loan.
The eligible loan is the lowest of the tests switched on and any scheme maximum. The EMI shown is the level EMI on that loan over the tenor.
Bank schemes behind the presets
| Scheme | Rent test | Property test | Tenor | Maximum |
|---|---|---|---|---|
| SBI Rent Plus | 75% of rent for residual lease or loan period, net of deposit, property tax, TDS, dues | 75% of realisable value | 10 years or residual lease | ₹7.5 crore (metros), ₹5 crore elsewhere |
| Canara Rent | 75% of net rent for the unexpired lease, net of TDS, advance rent, taxes | Property worth at least 100% of loan | 120 months or unexpired lease | ₹7.5 crore |
| Union Rent* | Lowest of 75% of net rent, and the loan the net rent can repay | 75% of value | 120 months or unexpired lease | — |
| Indian Bank IB Rent Encash (cat. A) | Present value of rent less 10% margin | 30% margin on realisable value | 120 months or residual certain period | ₹5 crore (Tier I/II) |
| PNB | Present value of net rent (net of TDS, GST, taxes) | 75% of value if over 5 years | 144 months or lease period | — |
| Central Bank Cent Rental | Lower of 95% of present value at 10% and 65% of future rent | Realisable value at least 150% of loan | Not stated on the page | ₹7.5 crore |
*From an archived copy of Union Bank's scheme page (September 2024); the current page was unavailable. Bank of Baroda (loans up to ₹100 crore, up to 15 years, 1.25× security cover, escrow and debt service reserve account) and ICICI Bank (up to 15 years subject to balance lease, escrow mandatory) do not publish a rent formula.
The tenant matters as much as the arithmetic. Lenders look at the tenant's standing, the registered lease, lock-in and notice terms, the building's age and title, and usually want the rent paid into an escrow account or directly under a tripartite agreement. RBI's 2009 circular classifies loans repaid mainly from rent on commercial real estate as commercial real estate exposure.
Questions people ask
How much loan can I get against rental income?
It depends on the bank's scheme, but the published public-sector formulas are similar. SBI Rent Plus lends the lowest of 75% of the property's realisable value and 75% of rent receivable for the residual lease or loan period, net of advance deposit, property tax, TDS and other dues. Canara Rent and Union Rent use 75% of net rent, Indian Bank uses the present value of rent less a 10% to 20% margin, and Central Bank uses the lower of 95% of present value at 10% and 65% of future rent.
Why do banks deduct TDS from rent when it is only a tax credit?
TDS is not a cost to you: it is credited against your income tax. But the tenant pays it to the government, not to you or the escrow account, so it is not available to pay the EMI. That is why bank schemes such as SBI, Canara, Union and PNB count rent net of TDS. From 1 April 2026, TDS on rent of land or buildings is 10% under section 393(1) of the Income-tax Act, 2025 (formerly section 194-I) where rent exceeds ₹50,000 a month.
What is the maximum tenure of an LRD loan?
Usually the lower of the residual lease period and the scheme's maximum. SBI Rent Plus allows up to 10 years; Canara Rent 120 months (up to 180 months for corporates); Indian Bank 120 months for top-rated tenants and 84 months for others; PNB up to 144 months. Some lenders count only the locked-in period of the lease.
Does the tenant pay rent directly to the bank?
Usually, yes. Most lenders require the rent to be routed through an escrow account or paid directly by the tenant under a tripartite agreement. Canara Bank and Indian Bank ask for a tripartite agreement; ICICI Bank and Bank of Baroda require an escrow account.
Is LRD available on residential property?
Generally not. LRD schemes are for commercial property such as offices, shops, malls and warehouses leased to dependable tenants. ICICI Bank, for example, states that rental income from residential property is not eligible. For a residential property, a loan against property is the usual route.
How does RBI treat lease rental discounting?
There is no RBI rule specific to LRD. RBI's 2009 circular on commercial real estate says exposures against existing commercial real estate whose repayment depends mainly on rent or sale proceeds are classified as commercial real estate exposures, which affects the bank's risk weight and provisioning.
Is anything I type stored or sent to Biz Corp Solutions?
No. The calculation runs entirely in your browser. Your inputs are only kept in this page's web address so you can copy a link and share the same calculation.
Own a commercial property leased to a good tenant?
We compare lease rental discounting offers from banks, NBFCs and financial institutions, structure the escrow and tenor around your lease, and prepare the file. The lender decides the final amount and rate.
Bank scheme terms used here are taken from the banks' own web pages as of October 2026 and are shown only to illustrate the method. Lenders change their schemes, apply their own valuation and tenant assessment, and may deduct other items from rent. Lenders, regulators and government offices apply their own rules and may round or calculate differently; their figures prevail. Biz Corp Solutions arranges funding through partner banks, NBFCs and financial institutions, and lenders decide sanction, rates and terms. Last reviewed 5 October 2026.