EPF Loans 2021

What are EPF loans?

The Employees’ Provident Fund Organisation is one of the largest social security organizations in the world and currently handles more than ₹ 13 Lakh Crore of funds. As you are aware that the funds are accumulated by monthly deposits from both the employer and the employee as they make their contributions (equal to 12% of the basic salary of the employee) towards the EPF account in the name of the employee. EPFO pays interest on the amount accumulated through these deposits. 

As per the rules prescribed by the EPFO, an employee can take out an EPF loan from his PF account in the form of a non-refundable withdrawal. He can use the money as a personal loan to address emergent situations. But the employee should duly apply to avail an EPF loan, as the EPFO thoroughly verifies the reason behind taking a loan.

The EPF loan that is being discussed here is not a loan as per the literal meaning of the term. It can actually be treated as an advance which can be availed by an employee under some specific situations only as prescribed by the organisation. At the same time, the good thing is that one does not need to wait till retirement to withdraw their funds. One can avail the facility of withdrawing their funds even while they are working with the same employer or another one.

However, the amount of withdrawal is limited to an extent, it is at the disposal of certain rules that one must adhere to in order to get the money out from the deposits. The rules defined by the EPFO include disclosing the reason for which the withdrawal is being taken and also considers the time period for which you were on the job.

As per the documentation criteria, one needs to submit the duly filled EPF Advance Form (also known as the Form 31) to the EPFO through the employer. If you need the EPF advance for your marriage, the marriage invitation card is required to be submitted with the application. One needs to provide details regarding their current salary; PF account number or the UAN and the details of the bank account in the given Form 31. Once all the claims are processed by the EPFO and upon approval, the advance will be credited directly to the account details provided by the member.

Afinoz also facilitates fast and easy disbursal of personal loans, directly into your account. To know more, you can call at the 24*7 helpline of Afinoz.com at 0120-411-0376.

The Employees’ Provident Fund Organisation (EPFO) allows its beneficiaries to carry out withdrawals in case there is an urgent requirement under specific conditions. The employees currently working or at the verge of retirement can apply for a non-refundable withdrawal for various needs pertaining to home renovation, buying a house or others.

However, EPFO has implemented certain rules to discourage premature withdrawal of money accumulated in the provident fund. Listed below are the valid reasons or situations in case one can get a loan against their PF account –

Education – One can avail a loan against their PF deposit if in case a need arises to pay for the education fees for yourself/ son/ daughter/ brother/ sister or any other family member. One can avail an amount up to 50% of the employee’s share so far plus the accumulated interest at the time of submitting the application.

Please note the following conditions under which the loan is disbursed –

• One must have a minimum membership period (service tenure) of 7 years
• One is required to present a certificate mentioning the course of study and the estimated fees and other expenses
• One can avail only up to 3 such withdrawals in a lifetime 

Marriage – A wedding is considered to be one of the most important occasion in one’s life. However, in making the day as memorable as it can be, one can avail a loan against their PF deposits in order to meet the outgoing expenses for one’s own wedding or it might be their son/daughter/brother/sister’s big day. One can get an amount up to 50% of the employee’s share plus the interest accumulated till the time of submitting your application.

Please note that you should meet the following conditions –

• One must have a minimum membership period (service tenure) of 7 years
• One would require to submit the marriage invitation card
• One can only avail up to 3 such withdrawals in their lifetime

Home Loan Repayment – Most of the people from the salaried class always aspire to buy a home of their own, for which many of us make good use of the credit facilities available for Home Loans. If in case one has already taken a loan to buy a house and would like to repay it using their provident fund deposits, one can avail a loan against the EPF to pay off their home loan balance. One can get an amount up to the total outstanding principal amount plus interest or 90% of the total contribution of the employer and the employee so far during their service length - whichever is lower.

Please note that you should meet the following conditions –

• One must have a minimum membership period (service tenure) of 10 years
• The loan must be facilitated from a nationalized bank/registered co-operative society
• One would require to submit a certificate from the lender clearly mentioning the breakup of the outstanding principal and the interest amount applicable on it
• One can avail only 1 such withdrawal in your lifetime

Medical Expense – For a person, who works for a salary, it is expected that all expenses are planned and accounted for a month. However, medical emergencies can be unexpected and can make any person financially vulnerable. The EPFO provides an opportunity so anyone can avail a loan against their Provident Fund deposits for medical treatment of themselves/ son/ daughter/ spouse/ dependent father or mother.One can avail an amount to the tune of their 6 month’s basic salary plus the dearness allowance or the employee’s contribution to the EPF plus the interest - whichever is lower.

Please take note of the following conditions that one must meet – 

• There is no service length obligation for withdrawal against medical expenses
• One would require to submit a prescription/certificate from the doctor stating the exact medical condition of the patient
• One can avail only 1 such withdrawal in their lifetime

Natural Calamity – The planet we live on and the atmosphere in which we sustain ourselves is ever changing, any human possesses no control over this changing course of nature. If in case one has incurred a huge loss due to a natural calamity, EPFO enables the member to withdraw from the provident fund deposit under given conditions. In any given case of calamity, a member is eligible to get an amount up to 50% of their contribution towards the fund so far.

Please note that you should meet the following conditions –

• One would require to submit a certificate of damage from a concerned authority
• No minimum service length criteria need to be fulfilled to avail this facility

Purchasing a land or a Housing Property – EPFO being one of the largest saving schemes, allows its beneficiaries to make use of these funds for the most suitable option. During the tenure of their service or at the verge of retirement, if one wishes to buy a piece of land for personal use in future or a house they dream of, they can avail a loan against their PF deposits for the same.

For purchasing a land, one can get an amount to the tune of 24 months of basic pay plus the dearness allowance. For purchasing a housing property, one can avail the withdrawal amount up to the extent of 36 months of basic pay plus the dearness allowance - whichever is the case.

Please note that you should meet the following criteria –

• One must have a minimum membership period (service tenure) of 5 years
• The loan against the Provident Fund shall be the person’s last resort of availing funds
• One can make only 1 such withdrawal in your lifetime

Home renovation – The EPFO has a provision for providing loan against the parked funds in case the beneficiary would like to begin construction of their new home or would like to renovate their current place of stay. One can avail a loan against their Provident Fund deposit to the tune of 12 times of their basic pay as the eligible amount.

Please note that you should meet the following criteria –

• The housed property should be at least 5 years old
• One must have a minimum membership period (service tenure) of 5 years
• The property should be owned by the member or jointly owned with their spouse

Company Lockout – The EPFO ensures the safety of funds in case of employer default. There are enough reasons to and several risks of a company’s failure or total lockout. For employees working for any such company which has been closed for a minimum of 15 days or the employer has not been able to pay the wages for at least 2 months, the employees are eligible to avail a loan against the Provident Fund deposits.

The loan amount eligible will be equal to the total unpaid wages, provided that one has the balance of the employee contribution in their respective PF account. Also, in case the company is under a lockout for over 6 months, the employees can utilize the fund under the employer’s contribution as well.

Please note that you should meet the following criteria –

• No minimum service length criteria are applicable for this facility
• The application with Form 19 shall be submitted to the Regional Provident Fund Commissioner providing insights about company’s current position 

Reason for Withdrawal	Limit	Service Tenure  (No. of years)	Other conditions
Education	Up to 50% of employee’s share of contributions	7 years	For the education of either self or child above class 10th
Marriage	Up to 50% of employee’s share of contributions	7 years	For the marriage of self, daughter/son, brother/sister
Home Loan Repayment	90% of the total contribution of the employer and the employee	10 years	Property must be registered in the name of employee or spouse jointly
Medical Expense	6 months of basic pay and dearness allowance	NA	For self or family members treatment
Natural Calamity	50% of the contribution towards the fund	NA	Certificate of damage from concerned authorities
Purchasing a Land or Housing Property	For Land: Up to 24 times the monthly wage	5 years	The asset, land or house must be in the name of the member, or jointly held with spouse
	For House: Up to 36 times the monthly wage
Home Renovation	Up to 12 times the monthly wage	5 years	Property must be in the name of the member
Company Lockout	For 15 days: Total unpaid wages, to the tune of employee’s contribution	NA	The wages not been paid for the last two months
	For over 6 months: Total unpaid wages, including contribution from both		The company is on total lockout for the last 6 months

Key Note –

If you opt for a personal loan, you can use the funds pretty much for any purpose you have. No questions will be asked at all by your lender. You can avail the best personal loans through the efficient online platform of Afinoz.com.  

Well, it’s really worthwhile to accumulate wealth in your EPF account. You will get the money when you retire and can enjoy your retirement to the fullest. But what if you require money right now to address some exigency or to acquire something really important in life?

You can take a personal loan, and if you like, you can even take a loan from your EPF account, which we will discuss here.