The Employees’ Provident Fund Organisation (EPFO) has mooted a group housing scheme which will enable members to form cooperative housing societies and use their entire provident fund savings towards buying land, constructing homes or paying housing loan instalments.
In its recent proposal to the Labour Ministry, the EPFO has proposed addition of a “new paragraph 68BD as a group housing scheme so that EPF members forming a cooperative society of 10 or more employees may be given not only a one time EPF withdrawal but also an option to pay loan instalments towards housing loan to banks from the monthly contributions received in Employees’ Provident Fund Scheme, 1952.”
Employees with at least three years’ subscription to the EPF scheme will be allowed to withdraw their savings for housing purposes, including repayment of loans from their monthly contributions.
“The present EPF scheme is not being properly utilised to withdraw money for constructing flats or buying land,” EPFO Central Provident Fund Commissioner V.P. Joy told The Hindu .
According to the proposal, members of an existing cooperative society formed under any present law could avail this scheme, provided at least 10 members of the housing society were subscribers to the EPF scheme.
At present, an employee, who has completed five years of service, is allowed to withdraw PF savings equivalent to 36 months of the member’s salary (basic salary and dearness allowance) for construction of a flat or 24 months of the salary for purchasing land. For availing housing loans, PF savings equivalent to 36 months of salary can be withdrawn only once after completing 10 years in service.
Cheap housing loans
“As per the present scheme, the EPFO has to notify and approve housing agencies through which houses could be built or land could be brought,” Mr. Joy said. “In the proposed scheme, the co-operative society formed by EPF members will be free to choose the housing agency.” He said the EPFO would also tie-up with financial institutions to provide cheaper housing loans to its subscribers.
At present, employees who have completed 10 years of service can also partly withdraw provident fund savings for repairing a house that had completed five years since construction.