Sir, I'm Maharashtra state Govt. employee. A nationalized bank is sanctioning a home loan to me, and they want an undertaking letter from my department stating that the monthly installment will be deducted from my salary and directly paid into my loan account with the bank. However, my department is denying to provide such an undertaking letter. Without it, my loan is not being sanctioned. Please guide me, is it my right to get such an undertaking from my department.
From India, Jalgaon
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From India, Jalgaon
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Hello,
It may sound harsh, but under the law, the employer is NOT obliged to issue such a certificate to a NATIONALIZED bank, nor does such a bank have such a right under the law! The bank is apparently enforcing its own rules despite having obtained two or more sureties/guarantors from you. Unfair, unprofessional, and unbusinesslike, but true!!
However, under the Cooperative Societies Act, u/s 49, the cooperative bank or society has the right to recover any outstanding amounts from your wages and other dues as applicable. The employer cannot refuse to deduct relevant EMIs and remit to such an institute, as in case of his refusal to do so, the coop. bank/coop institute, under the law, can proceed against the employer and recover the entire outstanding amounts as "arrears of land revenue."
But even this will be controlled by the provisions of the Payment of Wages Act and the Cooperative Societies Act. In any case, the employer can NEVER be forced to underwrite your loan (like a surety) so that if the borrower defaults, it will have to make good by repaying the loan. Deduction of relevant EMIs from earned wages, within the provisions of the Payment of Wages Act and remittance to the institute, can be enforced but not by a nationalized bank!
I trust your query is answered. I suggest that you assure the employer of the limits to his possibilities with the help of the lending bank, and you may be able to resolve this problem. Often, employers refuse such requests either out of ignorance of the scenario or sheer reluctance to get into probable and unwarranted hassles in the future. If we are able to set at rest their fears, the employer may even agree for all that you know.
Best of luck.
Regards,
Samvedan
August 11, 2011
From India, Pune
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321It may sound harsh, but under the law, the employer is NOT obliged to issue such a certificate to a NATIONALIZED bank, nor does such a bank have such a right under the law! The bank is apparently enforcing its own rules despite having obtained two or more sureties/guarantors from you. Unfair, unprofessional, and unbusinesslike, but true!!
However, under the Cooperative Societies Act, u/s 49, the cooperative bank or society has the right to recover any outstanding amounts from your wages and other dues as applicable. The employer cannot refuse to deduct relevant EMIs and remit to such an institute, as in case of his refusal to do so, the coop. bank/coop institute, under the law, can proceed against the employer and recover the entire outstanding amounts as "arrears of land revenue."
But even this will be controlled by the provisions of the Payment of Wages Act and the Cooperative Societies Act. In any case, the employer can NEVER be forced to underwrite your loan (like a surety) so that if the borrower defaults, it will have to make good by repaying the loan. Deduction of relevant EMIs from earned wages, within the provisions of the Payment of Wages Act and remittance to the institute, can be enforced but not by a nationalized bank!
I trust your query is answered. I suggest that you assure the employer of the limits to his possibilities with the help of the lending bank, and you may be able to resolve this problem. Often, employers refuse such requests either out of ignorance of the scenario or sheer reluctance to get into probable and unwarranted hassles in the future. If we are able to set at rest their fears, the employer may even agree for all that you know.
Best of luck.
Regards,
Samvedan
August 11, 2011
From India, Pune
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Letter of Undertaking.doc x
Employers have no obligation to Pay EPF Contribution above Statutory Limit.pdf