Pay EMIs for a low-cost house from your PF soon

NEW DELHI: The Employees’ Provident Fund Organisation (EPFO) may soon introduce a scheme to allow its over 40 million subscribers pledge their provident fund to

NEW DELHI: The Employees’ Provident Fund Organisation (EPFO) may soon introduce a scheme to allow its over 40 million subscribers pledge their provident fund to buy low-cost houses and use the account to pay equated monthly instalments.

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The organisation that maintains and oversees retirement funds of all salaried employees in the country is working on a housing scheme for its members, labour secretary Shankar Aggarwal told PTI.

“Under it, members will be allowed to pledge their PF accumulations to buy homes,” he said.

The proposal will be placed before the EPFO’s Central Board of Trustees meeting, which is expected in September. Once approved by the board, the scheme will be available for subscribers.

Finer points of the scheme, as to what extent subscribers will be eligible to avail loans and what will qualify as a low-cost house, are yet to be worked out.

“We don’t want to impose anything on the subscribers. Therefore, we will not buy land or build houses for them. They will be free to choose their own homes from the open market,” Agarwal said. The panel suggested the scheme for low-income formal workers who are EPFO subscribers and could not buy a house during their entire service period.

Under the proposed scheme, there will be a tripartite agreement between member, bank or housing agency and EPFO for pledging future PF contributions as EMI payment.

The proposal for facilitating EPFO subscribers to buy low-cost homes was listed on the agenda of the CBT meeting held on September 16, 2015.

A report of an expert committee on housing facility for the subscribers was also presented to the trustees during the meeting.

The committee unanimously recommended a scheme to facilitate subscribers to buy houses where they will get an advance from their PF accumulation and will be allowed to pledge their future contribution for EMI payment.

The panel suggested that subscribers will purchase a house with loans from banks or housing finance companies, and hypothecation of property in favour of the latter.

It suggested the benefits under the scheme of ministry of housing and urban poverty alleviation can also be extended to the scheme’s beneficiaries.

In May, labour minister Bandaru Dattatreya told the Lok Sabha in a written reply: “Government is exploring the possibility for providing a suitable low-cost housing scheme for subscribers of Employees’ Pension Fund. It is in preliminary discussion stage.”