A central government employee taking an advance to buy a bicycle or warm clothes will no more have to pay interest.
Advances are provided to government servants for catering to their personal needs or to finance the acquisition of assets. It is an important welfare measure and contributes towards keeping up the morale. Under the rules, two types of advances, namely, interest-free advances and interest-bearing advances can be sanctioned to a government servant.
Interest-free advances are usually given to defray the cost of purchasing tickets on tour, transfer, travel, retirement or in connection with medical treatment or for training in certain specified courses. Apart from this, interest-free advances of small amounts are also given to some categories of non-gazetted employees in specific circumstances like festivals and in calamities.
Interest-bearing advances are paid for purchase of warm clothing, table fans, typewriters by certain category of employees, cars, motorcycles, scooters, bicycle, computers and for construction/purchase of house/flat or enlargement of accommodation.
The Centre last month came up with a notification not to charge interest from employees who take advance to buy bicycles and warm clothes.
Earlier the government used to give an interest-bearing advance for purchase of warm clothing to all Group C and D employees posted in hill stations for a period of one year. Hill station is defined as a place situated at a height of 1000 metres or more above the sea level. An employee was entitled to take Rs 1,500 as warm clothing advance and he/she was required to return the amount in ten installments with interest. Similarly, an interest-bearing advance of Rs 1,500 was provided for bicycles.
The notification issued last month said: “The advance for purchase of table fan will stand discontinued. The advances for purchase of warm clothing and bicycle granted/sanctioned after the issue of this order shall be treated as interest-free advances.”
According to the notification, the existing provisions for interest-bearing advances relating to purchase of cars, motorcycles, scooter, mopeds and computers would continue to be in operation pending finalisation of the new arrangement (after taking into account the Sixth CPC’s recommendation). However, the eligibility criteria have been changed. For interest-bearing advance to purchase cars and computers, officials in the pay band of Rs 19,530 or more have been made eligible. For purchase of motorcycles, scooters and mopeds, officials in the pay band of Rs 8,560 or more will be eligible.
The Sixth Central Pay Commission in its report had said: “Advances for purchase of warm clothing and bicycle are for small amounts and are mainly utilised by employees drawing lower salaries. It may, therefore, not be appropriate to charge interest on these two advances.”