Easy PF withdrawal to boost demand, cut interest burden

Tribune News Service

New Delhi, March 26

The latest move by the Narendra Modi government liberalising withdrawal rules from provident fund accumulations comes with the twin objective of providing impetus to demand in various sectors at a time bank credit off-take is low and reducing burden of interest payment on accumulations.

Move to allow up to 90 per cent withdrawals, lowering loan threshold limits for housing, education, purchase of consumer durables comes with employee-friendly and simplified administrative procedures in which the government will trust its employees, instead of demanding proof to support the withdrawal request, top officials in the government said.

Earlier this month, the Central Government amended provisions of the General Provident Fund (Central Service) Rules, which, among others, includes changes in the category of withdrawals for education, obligatory expenses, illness and purchase of consumer durables. It now permits withdrawals for primary, secondary and higher education, covering all streams and institutions, as against only for higher education and increase of limit from 3 months’ pay or half the amount at credit, to up to 12 months’ pay or 3/4th of amount at credit, whichever is less. Now employees with 10 years of service will eligible to seek withdrawal in the category.

In the category of withdrawals related to housing, housing loan repayment, purchase of house site, renovations to house etc., amendments allow withdrawal of up to 90 per cent of balance at credit, de-linking from the limits prescribed under house building advance rules, allowing the subscriber to avail at any time during the service.

It will no longer be necessary to deposit the withdrawn amount back into the provident fund even in case the house for which it was withdrawn is sold.

Amendments have been made in clauses relating to withdrawal for purchase of motor car/motor cycle/scooter etc, repayment of loan taken for the same, extensive repairs of motor car and making deposit to book a motor car.

Now rules permit a common limit of up to 3/4th of amount at credit or cost of vehicle, whichever is less and service duration eligibility brought down to 10 years, instead of 28 and 15 years earlier.

In addition to the above, withdrawal of up to 90 per cent of balance without assigning reason, which is allowed to subscribers due for retirement or superannuation within a year, is now proposed to be allowed for up to two years before superannuation.

On the administrative side, a simple declaration by the subscriber explaining the reason for withdrawal will be sufficient and there is no need to submit documentary proof.