Loan against accumulations in PF Account

PF account, in general perception, signifies a balance, available after retirement or resignation from a current organization. So at times, while in continuation of service, if someone require funds, they generally opt for more popular source of funds such as personal loans, home loans etc, without even giving a thought that a more reliable source is also available, by way of your PF account balance. Sometimes, one use to avoid this source of fund, may be due to lack of clarity or may be because, he/she is not sure, whether he/she will can get money out of it or not. My effort is just to clear some mist over this entire issue.

The PF members are eligible to withdraw advance loan from their PF Account. However, there are some specified criteria / directions & procedures for this. This facility can be availed for purposes like marriage, education, medical treatment etc, subject to the prescribed conditions as mentioned here below. It may be noted that such advance is totally tax-free and interest-free.

The specified purposes & conditions are listed below :

Marriage

• Only for self, son, daughter, brother & sister
• Member should have completed at least 7 years of service (not necessarily with the same employer, but should have transferred the PF monies from previous employers for consecutive period of 7 years)
• Maximum of 3 times in the entire service
• Maximum amount is 50% of employee’s share at the time of tendering application.
• Member should apply in Form 31 through employer
• Marriage Invitation card should be submitted along with form as proof for marriage through employer.
• Declaration by the member which is attested by the employer.

Education

• Only for self, son & daughter
• Member should have completed at least 7 years of service (not necessarily with the same employer, but should have transferred the PF monies from previous employers for consecutive period of 7 years)
• Maximum of 3 times in the entire service
• Maximum amount is 50% of employee share at the time of tendering application
• Member should apply in Form 31 through employer

· Bonafide certificate duly indicating the fees payable from the educational institution.

Medical Treatment

· Only for self, spouse, son, daughter, dependent father & mother

• Applicable for major surgical operation in a hospital and 1 month or more hospitalization for the operation or suffering from TB, leprosy, paralysis, cancer, mental derangement or heart ailment.

· For this purpose, no minimum service is required.

• Members should obtain certificate from ESI or from employer that E.S.I. facility are not available for the member.
• A doctor (or registered medical practitioner) of the hospital certifies that a surgical operation or hospitalization for 1 month or more is/was necessary.

· Incase of TB or leprosy etc, a specialist doctor should certify the same

· Maximum amount given is 6 times of monthly wages or full employee share, whichever is less.

• A certified proof for the said decease has to be submitted along with the application in Form 31 through employer.

Purchase of Site for Construction of House there on

• Should have completed 5 years of services
• Members contribution with interest should not be less than 1,000
• Site should be free from encumbrances
• Site should be in the name of the member or spouse of the member or in the joint names of the member and the spouse
• The maximum amount given is least of (Basic + DA) for 24 months or total contribution & Interest or total cost of site.

Construction of House

• Should have completed 5 years of services
• Members contribution with interest should not be less than 1,000
• Site should be free from encumbrances
• Site should be in the name of the member or spouse of the member or in the joint names of the member and the spouse
• The maximum amount given is least of (Basic + DA) for 36 months or total contribution & Interest or total cost of site.

Purchase of Flat/House

• Should have completed 5 years of services
• Members contribution with interest should not be less than 1,000
• House/Flat should be free from encumbrances
• Flat/house should be in the name of the member or spouse of the member or in the joint names of member & spouse.
• The Agreement with the Flat promoter should be registered under the Indian Registration Act.
• The maximum amount given is least of (Basic + DA) for 36 months or total contribution & Interest or total cost of site.

Renovation / Modification in House

• Should have completed 5 years of services
• Only after 5 years of completion of construction of dwelling house
• Maximum amount given is 12 months (Basic + DA) or member share of contribution with interest, whichever is less.

Repayment of Loan

· Loan must be taken from state Govt, Regd Co-operative Society, State Housing Board, Nationalized Bank and Public Financial Institution.

• Should have completed 10 years of services
• Member contribution with interest should be more than 1,000
• The amount will be paid directly to the agency and not to the member
• The maximum amount paid is 36 Months Basic + Members accumulation with interest or Outstanding principal plus interest which is sought to be repaid, whichever is less.
• A certificate from the lending authority furnishing the details of loan and outstanding amount.

Advance in Abnormal Condition

· Loan is also allowed in abnormal conditions like Natural calamities etc.

• The maximum amount paid is 5000/- or 50 % of member’s own contribution share for 4 months, whichever is less,
• Certificate of damage from appropriate authority. 
• State Govt. declaration

Grant Of Advance To Members Who Are Physically Handicapped

· To Physically Handicapped member for purchase of an equipment required to minimize the hardship on account of handicap.

· Basic wages+ DA for six months or own share of contribution with interest or cost of equipment which ever is least.

· Production of medical  certificate from a competent medical practitioner to the effect that he is physically handicapped

Please note that the amount of advance or withdrawal is not required to be refunded back into the account under normal circumstances. However, if the amount is not utilized for the specified purpose, then the same will need to be refunded with penal interest.