Loan against EPF: Key Summary

The Central Government had launched Employees' Provident Fund (EPF) which is a retirement benefit scheme maintained by the Employees' Provident Fund Organization (EPFO). The employee and the employer contribute to the EPF scheme on monthly basis in equal proportions of 12% of the basic salary and dearness allowance as mentioned under the provision of the law.The Indian government has approved this scheme for salaried employees.

The Employees' Provident Fund (EPF) gives easy access to EPF loan facility, allowing PF account holders to swiftly withdraw money from their savings when needed.Employees / PF account holders can withdraw some money from their PF accounts and use it as a personal loan. But it is not like the typical personal loan where the person has to repay the amount to the bank, the loan is non-refundable.

Monthly contribution of 24% as mentioned above (equally contributed by employer & employee both @ 12%) makes the employee eligible to avail the loan facility or withdraw funds from PF account after the thorough verification process conducted by the EPFO.It is imperative to note that EPFO usually considers loans as withdrawal instead of an advance.

How to get a loan against the provident fund?

For getting a loan against the PF an employee has to apply for it on the official portal of EPFO. The step-by-step process is as follows.

• Login on the member interface of the EPFO unified portal using your credentials — Universal Account Number (UAN) allotted by EPFO and password.
• Click on Manage > KYC and check that your KYC details are correct.
• After login, go to the claims section under online services and verify your account details by entering the last four digits of your bank account number and confirm it by clicking on 'proceed for online claims'.
• Click on the drop-down menu and select Advances/Form 31 and then select the purpose of withdrawal; enter the amount you require and upload a scanned copy of your cancelled cheque followed by your address and other details that are required.
• Lastly, verify the process via Aadhaar authentication by providing the OTP received by you and submitting the request for a loan.
• The loan amount will be credited within 15 to 20 days after employer approves the withdrawal request.
• PF loans do not have an interest rate but a specific cost to pay.

Documents required to avail of an EPF loan

1. Aadhaar card for verification
2. Cancelled cheque to verify bank details
3. Form 19 for PF final settlement
4. Form 31 for PF partial withdrawal
5. Form 10-C: It is required for pension withdrawal benefit.

Please note the additional requirements

1. Universal Account Number (UAN) must be activated
2. The mobile number used to activate the UAN should be active for receiving OTP
3. Your Aadhaar Card details should have been seeded in the EPFO database.
4. OTP-based facility must be availed for verifying eKYC from UIDAI while submitting the claim.
5. Bank account details and IFSC code should be seeded in the EPFO database.

How to check the Status of EPF Advance Claim?

• Step 1: Visit the EPFO website.
• Step 2: Go to the "Services" tab and click "For Employees".
• Step 3: Go to the "Services" section and click on "Know Your Claim Status".
• Step 4: Enter your UAN and password to login.
• Step 5: Provide your EPF account number, establishment code and state of your PF office and check the status of your claim.

The govt. has made several rules, to comply with to get the loans sanctioned, to prevent frequent withdrawals from PF contributions so that it can serve its basic purpose of accumulating savings for the retirement of employees.