application letter for pf loan

Personal Loan
How to Apply for a PF Loan

What is a PF Loan?

Employee Provident Fund or EPF is a retirement benefits scheme approved by the Indian government for salaried employees. Under this scheme, a small sum of money is contributed by employees from eligible organizations from their monthly basic pay in their PF(Provident Fund) accounts.

Employees can withdraw a sum of money from their PF accounts and make use of the withdrawn money as a personal loan. While the name may signify that it is a loan, it is not like the typical personal loan where the person needs to repay the amount to the bank. In a PF loan, the repayment procedure is not included, as it is non-refundable.

The Employer’s Provident Fund Organization or EPFO oversees this procedure and allows an employee to withdraw money only after the reason is verified and justified. Usually, an employee who is in service for 5 years or above is sanctioned a loan from his/her PF account. This condition can change according to the reason for applying for a PF loan.

How to Apply for a PF loan?

There are two ways through which you can apply for a PF loan . They are as follows:

You can submit a physical application
You can submit an online application

Submit a Physical Application for PF Loan:

Download the composite claim form (Aadhar) or the composite claim form (non-Aadhaar) from the EPFO site
If you take the composite claim form (Aadhar), you will have to fill it and submit it to the respective EPFO office. You can submit the same without getting it attesting by your employer.
If you take the composite claim form (non-Aadhar), then you will have to fill it and submit it after getting it attested by your employer.
If you wish to withdraw only a certain sum from your PF account, you don't have to submit various certificates as the requirement has been removed. You can select the option to submit self-certification. To know more, click here.

Submit an Online Application for PF Loan:

Before you submit an online application to avail of a PF loan, you must meet the following requirements:

Make sure that your Universal Account Number or UAN is activated. Also, ensure that the mobile number which you have used for activating your UAN is still active.
Do not forget to link your UAN with your KYC (Aadhaar, PAN, and bank details).

Once you meet the above requirements, you won’t need the attestation from your previous employer.

You can follow the steps below to submit an online application:

Open the UAN portal and log in by putting your UAN and password.
Click on Manage > KYC. Follow this step to ensure that your KYC details are correct.
Once your details are verified, click on Online Services > Claim (Form-31, 19 & 10C)
Your details will now be displayed. You must now enter the last four digits of your bank account and then click on ‘Verify.’
Select ‘Yes’ on the pop-up window to proceed.
Click on ‘ Proceed for Online claim .’
Now, select the type of claim you want (full EPF settlement, EPF part withdrawal (loan/advance), or pension withdrawal) under the option ‘I Want To Apply For.’ If you are not eligible for PF withdrawal or pension withdrawal, then you will not see the option in the menu.
Click on ‘PF Advance (Form 31)’ and fill in the details.
Submit your form after clicking on the certificate. Once your employer approves your withdrawal request, the amount will be credited to your bank account within 15 to 20 days.

Documents that are required for a PF Loan Application

The following are the documents that are required for a PF loan:

Form 19: This document is needed for the final PF settlement
Form 10-C: This is required if you wish to avail of pension withdrawal benefit.
Form 31: This is required to withdraw a partial sum of money from your PF account

Rate of Interest:

Though PF loans do not have an interest rate, you will have to pay a specific cost. This cost is calculated in terms of the amount which would have accumulated as an interest rate on the withdrawn amount had you not taken it out. The interest which is calculated on EPF deposits is 8.5%. This rate is based on the monthly running balance.

Reasons to Take a PF Loan:

As mentioned above, the EPFO will approve of a loan from your PF account only when your reason to apply for it is justified. This process ensures that employees do not take advantage of a PF loan and withdraw small amounts frequently. Saving in a PF account leads to the financial stability of an employee even after retirement. And so, frequent withdrawal of cash is not encouraged while the employee is still in service. If you wish to apply for a PF loan, then you can check out some of the reasons below for which such a loan is usually approved:

Marriage: In India, a wedding is not usually a one-day event. It spans for days. Therefore, a hefty amount of money is spent on the festivities. So, if you want to withdraw money for this reason, then the following are some of the conditions which should be met:

You can withdraw 50% from your PF account.
You can withdraw money for the marriage of your children or siblings.
You must be in service for a minimum of 7 years.
You can withdraw up to 3 times.

Illness: To withdraw money for medical purposes, the following are the conditions that you must adhere to:

Unlike weddings, to take a PF loan for any medical treatment, you do not need to be in service for a specified time
You can withdraw the entire amount in your PF account or six months of DA and basic salary.
You can take this loan for yourself, your parents, and your spouse.

Renovation or Construction of a House: To own a house is a dream for many people. If you want to renovate your old house or construct a new one, then you can take a PF loan. Check the conditions required

You must complete a minimum of 5 years of service.
The property you wish to renovate or construct must be in your name or your spouse’s name. It can also be jointly owned by you and your spouse.
You can withdraw the amount just once.
You can withdraw your entire contribution or 36 times the basic salary and DA.

Education: If your child has bagged a seat in a university or college, then you can withdraw money from your PF account to contribute to the cause. Check the conditions below if you wish to take a loan for education purposes

You can withdraw only 50% from your PF account.
PF loan is sanctioned for only post-matriculation education of your children.
A service period of 7 years is mandatory.

To Buy Land: If you wish to buy a piece of land, then you can withdraw money as a PF loan from your PF account. You can check the conditions below to know more

A service period of 5 years is mandatory.
The property must be in your name or your spouse’s name. The property can also be jointly owned by both of you.
You can take out the money only one time
You can withdraw your entire contribution or 24 times your basic salary and DA

Lock-out of the Company: If any employee stops receiving his/her salary in the event of a lock-out, then he/she can withdraw money from his/her PF account after meeting the following conditions:

If a company has been shut down for 15 days and above or has stopped giving salary to the employees for two months or more, then the employees can take PF loans.
You can withdraw only your share or an amount that is equivalent to your unpaid salary.
If the company is shut for more than six months, then you can withdraw your employer’s share too

Unemployment: Those who are unemployed for a month can withdraw up to 75% from their PF accounts. If one is unemployed for 2 months and above, then he/she can withdraw the entire contribution from his/her PF account.

Apart from the above, one can also apply for a PF loan in the event of a natural calamity.

Advance Sanctioned for Covid-19

The coronavirus pandemic has wreaked havoc across the world and has led to the loss of millions of lives. With lockdowns enforced, many people have also lost their sources of income. To help affected employees in such turbulent times, a special provision has been added in the EPF Act by the EPFO. Under this provision, an affected person can withdraw a non-refundable COVID-19 emergency advance from his/her PF account.

Check the Eligibility Criteria Below:

Employees who work in a factory or organization that is located in a government-declared containment zone and who have been affected by the outbreak are eligible.
As the pandemic has spread across the country, all employees can take the EPF Advance.
You do not have to submit any document to get this Advance.
You can withdraw up to three months of your wages and DA. You can choose to withdraw 75% of your contribution from your PF account.
No repayment is required.

If you wish to avail of the EPF COVID-19 Emergency Advance then you must fill the online claim form. Make sure that your UAN is validated with your Aadhar card and the KYC of your bank account. You must also link your mobile number to your UAN to ensure the completion of the withdrawal process.

You can even use the Unified Mobile Application for New-age Governance or the UMANG app to avail of the COVID- 19 Emergency Advance.

Know-How to Calculate Your Loan

It is easy to calculate the loan amount which will be sanctioned to you. We will explain with an example. Let’s say Miss Kavita has applied for a COVID-19 Emergency Advance loan. She has a balance of INR 2.5 lakhs in her PF account. Now, the sum of her monthly basic wage and DA is 25000. So, the total amount for three months would be 75000. If we calculate 75% of INR 2.5 lakh, it will be INR 187500

Now since the sum of Miss Kavita’s DA and basic wage is less than 75% of her PF account balance , she will be able to withdraw INR 75000 as her COVID-19 Emergency Advance loan.

Check the status of your loan

To check the status of your EPF Advance claim, follow the steps below:

Open the EPFO website.
Select ‘Services’ and click ‘For Employees.’
You will now be redirected to a new window. In this window, select Services > Know your claim status.
Now log in by entering your UAN and password. You must also provide your PF account number, the state name where your PF office is located, and the establishment code.
Once done, you can check the status of your claim easily.

PF Loan - Frequently Asked Questions

Yes, you must contribute to your PF if you receive a salary of INR 15000 or more and you work at an organization where the workforce is over 20. If your organization’s workforce is less than 20, they can opt to get enrolled in EPF.

No, employees are not required to submit the forms to their employers.

No, the tax will not be deducted if you have been in service for five years consistently. If you have not worked continuously for five years, then tax will be deducted on the amount which is provided by the employer to the EPF.

Yes, you can check it online by visiting the official EPFO portal. However, you can access this feature only if you are still contributing to your PF account.

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Fixed Deposit
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Saving Schemes

In exchange for an employee’s dedication and hard work, the employer contributes to their retirement fund via their EPF account — a worker’s monthly contributions to the EPF equal 12% of their dearness allowance plus basic income. A total of 12% comes from both the company and the employee. Employees may also take out loans from their PF account at an interest rate of 8.25% on the corpus.

Even though employees may only access their EPF funds after retirement, they can still receive a part of their funds in case of an emergency, as long as they meet specific conditions. That form of withdrawal is referred to as an EPF loan. When is the best time to apply for a loan from the EPF? In this blog article, we will discuss that topic and more!

What is EPF loan?

The Employee Provident Fund (EPF) is a retirement benefits scheme that the Indian government has established for salaried workers. This scheme allows eligible employees to deposit a portion of their monthly base salary into a PF (Provident Fund) account.

Workers might obtain a personal loan by withdrawing a lump sum from their PF accounts. Despite the loan-sounding name, this is not your typical personal loan, where you must repay both the principal and interest. Repayment is not necessary for PF loans since they are non-refundable.

Employees can only access their savings when the Employer’s Provident Fund Organization (EPFO) has verified the reason for the withdrawal. Loans from PF accounts are often available to employees with five years of service or longer. This criterion’s applicability depends on the PF loan application’s intended use.

EPF Loan Interest Rate

You may get out of an EPF personal loan early, and they won’t want you to pay it back as a PPF loan would. That’s one way they vary from each other. So, it doesn’t come with an EPF loan interest rate. The interest you would have earned on the principle if you hadn’t withdrawn the money is proportionate to your repayment obligation. As of fiscal year 2023–24, the EPF loan interest rate is 8.25%, calculated by adding up the monthly running balance.

Step-by-step Procedure to Claim COVID-19 EPF Emergency Advance

The EPFO has inserted a one-of-a-kind provision in the EPF Act to provide a non-refundable COVID-19 emergency advance. As a result, EPF members will be able to keep their funds liquid and their cash flow steady, notwithstanding the coronavirus pandemic and shutdown.

All EPF members employed by factories or other businesses in a certain location will be eligible for the COVID-19 Emergency Advance if that area is confirmed to be impacted by the epidemic. All employees in India may now get the EPF advance due to the announcement of the COVID-19 epidemic.

To prepare for a COVID-19 emergency, you will require the following:

You may use this benefit without providing any paperwork or credentials, either as an employer or an employee.
Three months’ income + dearness allowance or 75% of the money in your EPF account, whichever is smaller, is the amount that cannot be reimbursed from the COVID-19 emergency advance.
Since the withdrawal is non-refundable, you are not obligated to repay the money and interest is also waived.

You may get the EPF emergency advance by filling out an online claim form, provided that your UAN is validated with Aadhaar and your bank account’s KYC. Linking your mobile device to your UAN is an essential step in the withdrawal process. The exact steps to do the same thing are:

Do EPF loan login with the help of the Member Interface of the EPFO Unified Portal using your Member ID and password.
Start by hovering over the “Online Services” sub-option and choosing “Claim.”
Enter the last 4 digits to match with your bank record.
Go to the “Proceed for Online Claim” button and click on OK.
Select the PF Form 31 prompt from the menu.
Set the goal to”Pandemic outbreak (COVID-19)”.
Provide your address and also a scanned check in the requirement.
Enter a One-Time Password (OTP) to confirm your transaction.

You may also use the UMANG app to request an emergency advance. To submit a praise claim, go to “Home,” then “EPFO,” “Employee Centric Services,” and lastly, “Praise Claim.” Claim submission requires using your UAN and the OTP issued to your mobile phone.

EPF Loan Eligibility Calculation

An employee is only eligible for an EPF loan apply online in the following cases:

1. Home construction or purchase

At least five years of service are required of the employee.
A worker may take out a loan equal to 24 times their monthly earnings for a house purchase or 36 times their salary for a home purchase and construction, whichever is higher.
In this case, only the account holder or spouse may seek EPF withdrawal for home loan.

2. Getting a mortgage back

For this person, three years of steady work is required.
Ninety per cent of the EPF corpus is available to you as a part of the EPF loan limit.
In this case, only the account holder or their spouse may seek a withdrawal from the EPF.

3. Medical care

No time restriction on employment is imposed when EPF funds are used for medical treatment.
Your withdrawal amount may be six times your monthly income plus interest or the employee’s share, whichever is lower.
Withdrawals may be requested by anybody having an EPF account, including the account holder’s parents, spouse, or children.

4. Wedding

Employees must have at least seven years of continuous service.
Half of the employee’s contribution plus interest is available for withdrawal as a part of the EPF loan limit.
Any account holder’s immediate family member, including children and siblings, can make a withdrawal request.

5. Acquiring expertise

Withdrawals from an employee’s EPFO contribution cannot exceed 50%.
The EPFO member must have worked for the organisation for at least seven years.
Children of employees are eligible to apply for and receive an EPF loan to help cover higher education costs.

6. Industrial Discrimination

Employees may be qualified to apply for an EPF loan if their employer has been inactive for fifteen days or more or has gone two months without payment.
It is up to the employee to decide whether to accept the whole amount or only a part, equal to their overdue wages.
If the company has remained dormant for more than six months, the employer and employee may be eligible to have their payments reimbursed.

7. Retirement

One year before retirement or at the age of 54, whichever occurs first, an employee is allowed to withdraw up to 90% of their EPF balance.

Documents Required for EPF Loan

You need to fill out a claim form to access the money in your EPF account. You may get money from your EPF account in a few different ways:

Filling out Form 19 is necessary to finalise the PF settlement.
You need to complete Form 10-C to receive a pension withdrawal benefit.
You may advance (partially withdraw) your EPF funds by completing Form 31 in the case of an emergency. The Member Interface of the EPFO Unified Portal makes it easily accessible.
Applying for a loan or advance from the EPF does not need gathering any additional papers. Submitting a correctly filled out Form 31 will allow you to achieve these partial withdrawals.

PF Loan Procedure

For EPF loan apply, complete these steps:

Get your User ID and Password from the EPFO Member Interface on their website.
The next step involves verifying your Aadhaar, PAN, and bank details on the Know Your Customer part of the “Manage” page.
Third, locate the “Claim (Form-31, 19, 10C & 10D)” drop-down option in the “Online Services” area.
You’ll see the member’s details on the screen that follows. Find the “Verify” area at the bottom of the page and enter your bank details there.
Next, choose “Yes” from the drop-down menu when asked to sign the undertaking certificate.
Click the “Proceed for Online Claim” button to choose the kind of claim you want to apply for. To complete the claim, please provide the employee’s address, the amount required, and the reason for the claim. Additionally, please include a scanned copy of your check or passbook.
After your firm authorises your online request, the funds should be delivered to your account within fifteen to twenty days.

EPF Loan Calculation

The authorised loan amount for you may be readily determined. An example will be used to clarify this point. Take Miss Sarita, for instance; she has applied for a COVID-19 Emergency Advance. There are now Rs.2.5 lakhs in her PF account. With her new DA and basic income, her monthly take-home pay is 25,000. The total for the three months would be 75,000. Using 75% of 2.5 lakh INR, we can obtain INR 187,500.

Miss Savita can acquire a COVID-19 Emergency Advance loan of INR 75,000 since her DA and basic income do not exceed 75% of her PF balance.

Check the Status of EPF Advance Claim

To check the EPF loan status , complete these steps:

Get to the EPFO’s website.
Go to “Services” and then choose “For Employees.”
A new window will pop up, and you may access this URL. Afterwards, choose “Services” and last, “Know your claim status” from the appearing menu.
Now, you may log in using your UAN and password. In addition to the establishment code and your PF account number, you must also know where your PF office is.

You will get to know the status of your EPF Advance claim.