Daybreak - $15 billion in security deposits: India's tenants are their landlords' cheapest lenders

Episode Date: July 16, 2026

Tenants across India's six biggest metros have handed landlords Rs 1.26 trillion in security deposits, a new NoBroker study estimates. Around $15 billion of tenant money, refundable in name, sits in landlords' accounts earning interest for people it does not belong to. In this episode, host Snigdha Sharma ask what a deposit actually costs a renter, and arrives at a number: nearly a month's rent, every year. The same tenant who pays 2 months' deposit in Mumbai is asked for 10 in Bengaluru, and in Delhi NCR, about 4 in 10 never got their full deposit back. Renting was meant to be a phase. But with home ownership drifting out of reach, tenants may be extending this loan for decades.Tune in.Recommendations:It sucks to be a tenant in Bengaluru right now*Take The Ken's audit hereDaybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Here is a question that I recently asked myself. What does my security deposit cost me? The normal understanding is nothing, right? It is refundable. You get it back when you move out. I mean, that's the whole point of a deposit. But let's run the numbers. Say, I rent a flat in Bangalore for $40,000 a month and I paid a 10-month deposit,

which, by the way, is common in this city, that is $4,000. rupees. Now, if that money sat in my own fixed deposit at today's rate, say around 6.5%, it would earn me about 26,000 rupees a year. Instead, it sits in my landlord's account and whatever it earns, it earns for him. $26,000 is more than half of my monthly rent. So every year that I rent my flat, I'm basically handing my landlord almost one extra month of rent. And that's the problem, because nobody really thinks of a deposit as what it actually is, which is an interest-free loan from us to our landlords. Now, imagine how many people in India live as renters.

A study by the property platform No Broker, which was reported about by business standard this week, estimates that tenants across India's six biggest metros have handed landlords, and wait for this, 1.26 trillion in security deposits. That is 1,26,000 crore rupees of tenant money. Now, if this was put in FDs, it would generate more than 8,000 crore rupees a year in interest. In Delhi NCR, for example, the study found about 42% of tenants did not get back their full deposit when the lease ended. Three in 10 saw deductions, around 1 in 8 ended up fighting a dispute. And more than, more than

More than 4 and 10 lenders in this market either lose a piece of their own money or have to fight to recover it. The scary part is how normalized all of this has become, like it's a part of renting. And here is what gets to me the most. India regulates nearly everyone who holds other people's money, whether it is banks or NBFCs. Even when pure-to-pure lending apps grew into an industry of 11,000 crore rupees at their peak, the RBI stepped in with escrow rules and fines. This security deposit pools is more than 11 times that size and it has none of those protections.

The landlord keeps our money in his own account, owes us nothing on it and of course there is no deadline for him to return it. So how did India's renters become the biggest lenders without even noticing? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nica Sharma, and I don't chase the new cycle. Instead, every day of the week, my colleague Rachel Vargis and I will come to you with one business story that's worth understanding and worth your time. Today is Friday, the 17th of July. Hi, this is Rachel and before we get to the rest of the episode, I have a

quick scenario for you. Imagine that your main AI account, chat GPT, Claude, Gemini, whatever you actually live in, vanishes tomorrow. Your login, your history, your history, subscription, everything, gone overnight. What happens to you? Is it nothing? Or do you lose real work? Your prompts, your projects, a system that has learned exactly how you think.

Now, sit with that for a second. And if you don't know the answer, well, that is kind of the answer. The Ken has built a five-minute audit that scores how dependent you actually are on AI and it ends with a verdict. Most people come out more exposed than they would have guessed. The link is in the show notes.

Now, on to the episode. The no broker's study breaks down the $1.26 trillion rupees down by city. Mumbai holds the most over $41,000 crore rupees. And then it's followed by Bangalore at $32,000 crore rupees. Delhi NCR holds around $24,000 and Chennai more than $7,000. 17,000 crores. Hyderabad and Pune are left with the remaining. Now, the most interesting number is hiding inside this ranking. You see, Mumbai has more renters than Bangalore and its rents are also higher. Yet, its deposit pile is only about 30% bigger than Bangalore. And Bangalore's

pile of security deposit is enormous for its size. And the reason for this is one that all of us renters in this city know. Deposits here commonly. run from anywhere between six to ten months of rent. In most other metro cities, it is about one to two months. This gap makes you wonder what really is a deposit? A deposit is supposed to price risk, right? It is a chance when maybe a tenant destroys the flat or vanishes without paying rent. But if this was the case, the deposit would track the tenant, no? For example, a software engineer with a steady salary and five years of documents. rental history would pay a small deposit wherever she went.

But in practice, the deposit tracks the city. The same tenant with the same salary and the same furniture is asked for two months in one metro city and 10 months in another. So how did her riskiness increase by five times as soon as she crossed the Karnataka border? Clearly, this deposit is measuring something else. And what is that? It measures how much the local market lets the landlord stay. Let's take Bangalore.

The city gives them three advantages at once. It is a city of migrants where most tenants arrive from somewhere else, hunting in the same few job corridors, so a landlord near a tech park can name his terms knowing that there is a queue behind you. The deposit is also valuable to him in itself, because it is free working capital and it is money that he can park in an FD or roll into the next property. So he has every reason to ask for the maximum that the queue will bear. And once this six or ten months becomes the norm, the tenant who objects has nowhere cheaper to go. There will be

10 other people to replace him. And obviously there is no rule anywhere in Karnataka that says that a landlord must charge less. So a deposit that is said this way is a loan whose size reflects the lender's weakness. And look at who the lenders are. The study says that rent is already the single largest line item in most urban tenants budgets. For nearly half of them, it eats more than 30% of their monthly income. In Mumbai, roughly 4 in 10 tenants send over 40% of their earnings to their landlord every month. These are the households with the lease lack and they are the ones extending the credit. The money in the system flows uphill from people who are stretched to people who own property.

It also flows most often from the young. The study found that tenants age between 18 to 24 are the most mobile group in the market. Three in 10 of them move every 6 to 12 months. And among people over 35, that number drops to around 1 in 10. Now remember what moving means in this system. Every move reissues the loan. You assemble the deposit for the new flat while the own landlord still holds the deposit for the last. one. And anyone who has moved flats in the metro knows that bridging period where two landlords

are sitting on your money at the same time and your savings account is empty. So the people that this deposit system tax is the hardest are younger workers changing their jobs and their neighborhoods. But this is the same behavior that cities like Bangalore advertise as their economic engine. And the tax also changes this behavior obviously. Seventy-five percent of Bangalot tenants told this study that a high deposit has at some point stopped them from moving into a home that they liked. This is the highest figure for any metro. Think about what that means in credit terms. The lender is kind of rationing herself. She is turning down the flat that she wants because she cannot afford to give the loan that comes with it. Now, here is the part that really

blows my mind. We, people who move to cities and live in rented apartments, always look at the security deposit as a phase of life. You rent through your 20s and 30s, you lend and then you recover and then you lend again, and eventually you do buy and then the whole circus ends. But this study's data says that that exit is kind of closing. For the same property, the EMI on a 30-year home loan now runs well above the monthly rent in every major city, and the gap has widened since 2021. Tenants keep renting because the math of buying has moved beyond them. So if things continue like this, I mean, if renting becomes the norm or the permanent condition of urban working life, the deposit is a loan that we are extending for decades.

We will reissue it in every city that we move to and every flat we upgrade to. At zero interest, probably well-intridden. to our 40s and maybe even beyond. What I'm trying to say is a lending relationship this large, this permanent and this one-sided should ideally have a regulator standing over it, no? By the way, a disclosure before I sign off, No Broker who ran this study that I spoke about in this episode sells deposit-free rental plans, which means it also benefits from deposits looking broken.

So, just putting it out there. Thank you for tuning in. If you have any feedback, please write to me at daybreak at the ken.com. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleagues Niktha Sharma and edited by Rajiv CN.