EPF stands for Employee Provident Funds which is a government-approved retirement benefits scheme available for the employees of a company in India.
This is a social security scheme provided to employees who want to save for retirement. The investment that you save in EPF will be invested in various assets like bonds, stocks, etc. and you’ll receive a return on your investment.
At the time of maturity, you’ll receive the entire amount with interest back. But if you want you can also take loans on your EPF Account.
In a world where financial uncertainties, EPF loans can help you navigate out of that by securing your finances.
Whether is a dream wedding, that long-awaited higher education, or a home, all this can be purchased through an EPF Loan.
In this article, we will discuss EPF Loan, how to avail an EPF Loan, Documents required for an EPF Loan, etc.
Eligibility Criteria for EPF Loan
The following are the eligibility criteria for EPF Loan-
| Reason for Withdrawal | Limit of Withdrawal | Minimum Years of Service | Additional Conditions |
| Education | Up to 50% of employee’s share of EPF contribution | 7 years | Utilized for employee’s own education or children’s after 10th class. |
| Marriage | Up to 50% of employee’s share of EPF contribution | 7 years | Can be used for employee’s own marriage or for family members. |
| Purchase of Home/Plot | For home: Up to 36 times monthly wage + dearness allowance For land: Up to 24 times monthly wage + dearness allowance | 5 years | Property must be in the name of employee, spouse, or jointly owned. |
| Medical Treatment | 6 times of wages + dearness allowance | N/A | Used for own/spouse/parents/children’s treatment. Hospitalization required for a month. In certain illnesses, advance can be taken without hospitalization. |
| Home Loan Payment | Up to 90% of combined employee & employer EPF contributions | 10 years | Property must be in the name of employee, spouse, or jointly owned. Documents for housing loan required. PF accumulation > Rs. 20,000. |
| Calamity | Up to 50% of employee’s share | N/A | Employer certification of damage is necessary. |
| House Addition/Alteration | 12 times of your wages | 5 years | Property must be in the name of employee/spouse or jointly owned. House should be at least 5 years old. |
| Lockout | Equal to unpaid wages | N/A | Employer unpaid for 2 months or company closed for 15 days. |
| Withdrawal before Retirement | Up to 90% of accumulated balance with interest | 57 years | Applicable to the employee only. |
How to Avail of EPF Loan?
You can follow these steps to avail the EPF Loan-
- The very first step is to find out whether you are eligible for the EPF Loan or not, if you are eligible then you can take the loan
- Visit the official website of the EPFO Portal and login to your account using the login credentials (UAN and password)
- After logging in, navigate to the “Online Services” or “Services” section, where you’ll find various options related to EPF claims and services
- Under the claim options, select the one related to loans. It might be named “Loan/Advance” or “EPF Withdrawalf.”
- Now fill out the loan application form i.e., Form-31 with details like name, amount you wish to withdraw, and your bank account details
- After filling out the form, submit the application will then be forwarded to your employer for verification
- Your employer will receive your loan application and will need to verify the information you provided. The employer’s approval is essential for the loan processing.
- Once your application is verified by your employer, the EPFO will initiate the loan disbursement process. The approved loan amount will be transferred directly to the bank account linked to your EPF UAN
Documents required for EPF Loan
The following are the documents required for the EPF Loan-
- Form 19: It is required for the Final PF Settlement
- Form 10-C: It is required for pension withdrawal benefit
- Form 31: It is required for partial withdrawal (advance) of EPF in case of an emergency. It can be directly accessed from the Member Interface of the EPFO Unified Portal
- Identity documents- Aadhaar Card, PAN Card, etc.
- Address Proof- Electricity bill, utility bill, PAN Card, Credit card bill, etc.
FAQ
EPF loans are granted for specific purposes such as education, marriage, home purchase, medical treatment, home loan payment, calamity, and more. Each purpose has its own eligibility criteria and limits defined by the Employees’ Provident Fund Organization (EPFO).
The interest rate on EPF loans is determined by the EPFO and is generally lower than commercial loan rates. The interest rate is typically based on the prevailing EPF interest rate. The current EPFO interest rate is 8.15% p.a.
You cannot withdraw your EPF Balance unless your outstanding EPF Loan is paid off.
The time taken for EPF loan approval and disbursement can vary. Generally, it might take a few weeks from the time you submit the loan application to its approval. The process involves employer verification, documentation review, and approval by the EPFO.
