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Loan & Advances

Advances Payment system 




An employee advance /loan is a cash assistance given to an employee while he is in need of money due to unavoidable circumstances in his personal front. As a broad guideline the following reasons may be observed under the gambit of exigencies:

   a.    Marriage (Self, dependent brothers/ sisters/ daughter/ son).

   b.    Hospitalization of self/ dependent family members.

   c.    Ceremonies in the house of specific nature cause due to death of any first line family member.


Any other miscellaneous reason of grave nature/calamity that has caused a need for cash assistance to the employee with which the immediate superior is satisfied and has found the employee to be genuine and reasonable in his request.



 This policy is applicable to all units of _________ Group.



An advance / loan can be granted to any employee who approach for loan / advance in writing addressed to his immediate superior. The immediate superior should put it up with his recommendation to the approving authority clearly stating his conclusive decision along with logic for such a decision.

Employee claiming a loan /advance shall be granted an amount which should as follows:



Employee with 6 months & below employment in the Company

No loan is allowed but salary advance may be allowed which shall be deducted on immediate pay day.


Employee with 6 months to 5 years employment in the company

2 months Basic + HRA Maximum


Employee with 5 years and above employment in the company

3 months Basic + HRA Maximum


In above case of (b & c), amount will be deducted in ten (10) equally monthly installments.

 A salary advance would mean an immediate need for cash to the employee for his personal need depending on his monthly salary due for logical reasons like his proceeding on leave till the pay day etc. This amount shall be granted as an advance, which shall, however, be adjusted against salary payable on the immediate pay day succeeding such a payment.

 Salary advance will be paid on the basis of working days. The same are given as under, if,



Working day are

25 & above will get 80% amount of his salary


Working days are

20 to 24 will get 60% amount of his salary


Working days are

15 to 19 will get 40% amount of his salary.


As per the Income Tax Rule, interest free loan exceeding to Rs. 20,000/- if given to an employee then it will be treated as perquisite and will be part of taxable salary of the employee.

In view of the above the loan exceeding to Rs. 20,000/- is given to an employee, then the perquisite value will be calculated by applying the following interest rates on reducing monthly outstanding balance or such other rates as may be prescribed under Income Tax Act / Rule, from time to time:

 Purpose of the Loan                                         Rate of Interest (p.a.)

 Marriage (refer 51.01.a)                                     13%

Hospitalization (refer 51.01.b)                              NIL

Ceremony at House (refer 51.01.c)                     13%

Housing – Construction / Purchase                     10%

(Not for repair)

Others (Including Housing loan for repair)           13%


The above guideline shall remain as a thumb rule for the recommending authorities to decide loan requests from employees, which comes from time to time. However, it shall not become an entitlement of every employee to gain a loan / advance from the company every year and no employee would, however, be granted a loan / advance if he has not completed six months time of his last installments of deduction of his last drawn loan /advance. It is in any case expected from the recommending authorities that they prudently discriminate the genuine need and the unreasonable demands and put up their recommendation appropriately. While the upper limits have been mentioned the need based real approving authority for the above loan / advance shall be minimum of SBU Head. Deviations from the above guidelines, if any, shall be done only by MD.



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