The Employee Provident Fund (EPF) is a government-authorized retirement savings plan for salaried employees in India.
This system is endorsed by the Indian government and allows employees from eligible organizations to deposit a portion of their monthly basic salary into their PF (Provident Fund) accounts.
Employees have the option to withdraw money from their PF accounts to use as personal loans.
However, unlike a conventional personal loan where repayment is required to the bank, this loan from the PF account is non-refundable.
This process is overseen by the Employer’s Provident Fund Organisation (EPFO), which allows employees to withdraw money from their PF accounts after validating the purpose.
Employees who have worked for a firm for more than 5 years are eligible to apply for a loan from their employer.
EPF Loan Eligibility
Here are a few frequent reasons why the firm allows EPF Loans:
- Marriage: An EPF advance might be offered for your own marriage or for the marriage of your son and daughter.
- Education: Education is one of the primary causes of PF withdrawal. It might be for your child’s, son’s, brother’s, or sister’s schooling.
- Purchase of a home or plot: You can withdraw your EPF funds to purchase a home or plot.
- Medical treatment: If your husband, daughter, son, father, or mother needs medical care due to a serious illness, you are entitled to an EPF loan.
- House loan repayment: Some people use EPF loans to pay off their house loans.
- Natural disasters: In the event of a natural disaster, you can withdraw funds from your PF account to compensate for large damages.
- House addition/alteration: An EPF loan can also be used to repair or modify a person’s home.
- Lockout: During a lockout, when an applicant may be unable to receive his or her wage, an EPF loan might assist him or her in meeting basic needs.
- Withdrawal before retirement: An applicant may remove the bulk of the funds in his or her PF account prior to one year of retirement.
Interest Rates on EPF Loans
PF loans do not accrue interest, but a fee must be paid, which is calculated based on the amount that would have accumulated as interest on the withdrawn amount if it had not been taken out.
The interest rate on EPF deposits is determined based on the monthly running balance, which is currently set at 8.5%.
How Do You Apply For An EPF Loan?
There are two methods for applying for a PF loan:
- Physical application submission
- Online application submission
How Do I Apply for an EPF Loan Physically?
- Download the Aadhar composite claim form or the non-Aadhaar composite claim form from the EPFO website.
- In the event of a composite claim form (Aadhar), you must fill it out and submit it to the appropriate EPFO office. You are not required to get it certified by your employer.
- You must fill up and submit a composite claim form (non-Aadhar) when your employer attests it.
- If you just wish to withdraw a set amount from your PF account, you do not need to submit several certificates.
How Do I Apply For An EPF Loan Via Online Form?
- To log in, go to the UAN site and enter your UAN and password.
- Check that your KYC information is valid by going to Manage > KYC.
- After you have verified your information, go to Online Services > Claim (Form-31, 19, & 10C).
- Your information will be shown on the screen.
- Enter the last four numbers of your bank account and then click ‘Verify.’
- To proceed, click ‘Yes’ in the pop-up box.
- Select ‘Proceed for Online Claim.’
- Then, under the option ‘I desire To Apply For,’ pick the type of claim you desire (full EPF settlement, EPF portion withdrawal (loan/advance), or pension withdrawal). If you are not qualified for PF or pension withdrawal, you will not see the choice.
- Click ‘PF Advance (Form 31)’ and fill out the form.
- After clicking on the certificate, submit your form.
- After your employer authorises the withdrawal request, the funds will be sent to your bank account within 15 to 20 days.
