The EPF Scheme, 1952, currently allows subscribers to partially withdraw from their EPF accounts for buying a house, marriage, medical treatment and education
In what could come as a big relief to home buyers, the government is looking to amend the Employees' Provident Fund (EPF) scheme to allow its members to withdraw up to 90% of their savings in the fund for making down payments while buying a home.
The alteration in the scheme would also permit EPFO members to make equated monthly installments (EMIs) of home loans from their PF accounts.
The EPF Scheme, 1952, currently allows subscribers to partially withdraw from their EPF accounts when they are in the job for some specific purposes like buying a house, marriage, medical treatment and education.
The new proposed provision in the EPF scheme would reportedly require EPFO subscribers to form a cooperative society with at least 10 members for availing the facility.
"The government has taken a decision for modification in the EPF Scheme, 1952, to add a new paragraph 68 BD," Union labour minister Bandaru Dattatreya said in a written reply to Rajya Sabha.
The minister said that the new proviso provides that "a member of EPF, being a member of a co-operative society or a housing society having at least 10 members of EPF, can withdraw up to 90% from the fund for purchase of dwelling house/flat or construction of dwelling house/acquisition of site."
Dattatreya said it was not possible to give any targets for advances under the scheme as it was yet to be notified.
The paragraph that would be added in the scheme would enable EFP members to avail the facility of "monthly instalments for repayments of any outstanding payments or interest may also be paid from the amount standing to the credit of the member, to the government/housing agency/primary lending agency or banks concerned".
Sonu Iyer, partner and leader – human capital services, EY India, said the government, while keeping the focus on ensuring the social security for old age for EPF members, was also creating a basket of retirement products for current needs like house, education, marriage and medical emergencies.
"Currently, you are allowed advances from the EPF balance. Some of them are loans that must be returned within certain period of time. They (government) are allowing withdrawal of up to 50-80%. Then there are advances that you don't need to repay. This (proposed provision and amendment in the EPF scheme for up to 90% withdrawal for buying a house) must be in line with the way the scheme has been worded," she said.
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