Metro Access Cuts EMIs, Improves Loan Repayment Discipline: EAC-PM Study

A January 2026 EAC-PM study finds that households living near metro corridors show lower home loan defaults and higher prepayments as commuting costs fall and monthly cash flows improve.

New research by the Economic Advisory Council to the Prime Minister (EAC-PM) reveals that improved metro connectivity helps households reduce recurring transport costs, which in turn supports better home-loan repayment behaviour with lower delinquency and higher prepayment rates in cities like Delhi, Bengaluru and Hyderabad. 

The findings are based on granular home-loan data and reinforce the financial benefits of urban mobility investment. 

Metro Connectivity Supports Better Financial Behaviour Amid Rising EMIs

Improved metro access across India’s cities is showing bigger results than faster commutes and lower pollution. According to the EAC-PM working paper titled Golden Decade of Infrastructure Development in India with Special Reference to Metro Rail Network, households in metro-served areas manage their monthly budgets more effectively. 

The study finds that lower transport costs from reduced reliance on private vehicles free up cash that helps families stay current on home loan equated monthly instalments (EMIs) and even prepay outstanding loans. 

The research used loan-level administrative data, metro rollout dates and geographic information to compare repayment behaviour across metro-connected and non-metro neighbouring PIN codes. In Delhi, mortgage delinquency dropped by 4.42% and prepayments rose by 1.38%, signalling stronger financial discipline. 

In Bengaluru, residential households saw delinquency fall by 2.4% and prepayments increase by 3.5%, while Hyderabad recorded a 1.7% drop in delinquency and a 1.8% rise in prepayments after metro access improved. Vehicle registration trends in these cities also showed fewer new private vehicles, supporting the idea that savings from transport expenses are redirected to loan servicing. 
 

Earlier Reports Point To Similar Trends

Multiple news outlets have highlighted this research. The Economic Times reported that households in metro-accessible areas are showing stronger EMI discipline due to lower transport expenses and improved liquidity management, noting the same city-specific effects on delinquency and prepayment. 

Financial Express emphasised the mechanism, noting that lower fuel, maintenance and vehicle loan EMIs free up cash flow for housing loans. Business Standard added that metro access could be factored into lenders’ credit risk models, treating connectivity as a risk-mitigating factor. Collectively, these reports amplify the view that transport infrastructure yields financial spillovers beyond mobility and environmental upshots.

LoansJagat reported on metro project financing such as a €49.5 million top-up loan for Pune Metro from the European Investment Bank, illustrating the sustained push for metro expansion and its broader urban economic implications. 
 

Lenders and economists point out that the study’s evidence could influence how credit risk is assessed. Business Standard reports that the Council sees a case for lenders to treat metro connectivity as a risk-mitigating factor in underwriting and pricing, since delinquency and prepayment are key portfolio risk drivers.

Conclusion 

The EAC-PM findings strengthen the narrative that metro rail infrastructure is not only a transport solution but also supports household financial resilience and credit discipline by lowering non-housing expenses. If adopted into lender practices, this perspective might shape urban loan products and risk frameworks going forward.