EPF or Employee Provident Fund is a retirement savings scheme backed by the government of India to provide financial security to salaried employees. Under this scheme both the employee and the employer make contributions towards the fund and the amount is deducted from the employee's monthly salary. The provident funds are managed and regulated by the Employee's Provident Fund Organization (EPFO).
Employee's Provident Fund Organization (EPFO) allows employees to partially withdraw money from their PF accounts and use it as a personal loan to deal with emergency situations. While this is often referred to as an EPF Loan it is not exactly a loan but actually an advance as the amount withdrawn does not have to be paid back (non-refundable) in most cases (unlike in case of a personal loan). However, it should be noted that EPFO first verifies the reason for withdrawal and allows you to withdraw money from your EPF account if the reason is justifiable.
The EPF advance comes in handy especially in circumstances where a person may need money to overcome a stressful financial situation. To help EPF account holders in such situations, EPFO (Employees Provident Fund Organisation) allows emergency withdrawals, popularly known as EPF loan or EPF Advance. In the subsequent sections, key aspects of the EPF loan are discussed.
Following are the key reasons for which you can avail an EPF loan:
- Marriage: You can take an EPF advance for your own marriage or for your son’s and daughter’s marriage.
- Education: Education can also be the reason for PF withdrawal. You can get money to fund your own education or the education of your daughter, son, brother or sister.
- Purchase of home or plot: As purchase of home or plot requires a significant amount, the Employee Provident Fund loan is available to the applicant in this case.
- Medical treatment: If your spouse, daughter, son, father or mother is ill, you can withdraw your EPF for the treatment. However, the loan against the EPF can be received only in the case of serious illness.
- Home loan payment: The payment of the home loan can also be done through EPF advance, only if the applicant satisfies certain necessary conditions as specified by the EPFO Act.
- Calamity: Any natural calamity can bring you huge losses and EPF can be withdrawn in such a case.
- Addition/ alternation of house: The EPF loan can also be taken to renovate or expand your existing house.
- Lockout: During harsh situations of lockout, an applicant may stop receiving his salary. Thus, to cope with and afford basic necessities of life, the EPF loan is available to those applicants.
- Withdrawal before the retirement: An applicant can withdraw the majority of his/ her corpus before one year of retirement.
