In a move aimed at simplifying the procedure of payment of EMIs for homes, the Employees' Provident Fund Organisation (EPFO) may soon roll out a scheme that will allow its over 4 crore subscribers to buy low-cost houses against their provident fund (PF).
"We are working on a housing scheme for members of the Employees' Provident Fund Organisation (EPFO). Under it, members will be allowed to pledge their PF accumulations to buy homes," said Labour Secretary Shankar Aggarwal.
He added that the proposal will be placed before a meeting of retirement fund body EPFO's Central Board of Trustees expected next month.
Once approved by the CBT, the scheme will be available for the 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," Mr Aggarwal added.
The panel had suggested this 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/housing agency and EPFO for pledging future provident fund contributions as EMI payment.
Last year, the proposal for facilitating the EPFO subscribers to buy low cost homes was listed on the agenda of the Central Board of Trustees meeting held on September 16.
A report of an expert committee on housing facility for the subscribers was also presented to the trustees during the meeting.
The committee has 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 PF contribution as EMI payment.
The panel had suggested that subscribers will purchase a dwelling unit with loans from bank or housing finance companies and hypothecation of property in favour of the latter.
It was suggested the benefits under the scheme of Ministry of Housing and Urban Poverty Alleviation can also be extended to the beneficiaries of the scheme.
In May, Labour Minister Bandaru Dattatreya had 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."
(With PTI inputs)
