Dear CiteHR members,
At my organisation we are contemplating the idea of providing Personal Loan facility to our employees. This loan amount could be for the purpose of house rennovation , funding for family function or buying a new vehicle.
Can i request you to share with me the nature of similar policies in your organisation ?
You could write a gist about the nature of a similar policy . Also pl mention the industry that you represnt.
Best Regards
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1At my organisation we are contemplating the idea of providing Personal Loan facility to our employees. This loan amount could be for the purpose of house rennovation , funding for family function or buying a new vehicle.
Can i request you to share with me the nature of similar policies in your organisation ?
You could write a gist about the nature of a similar policy . Also pl mention the industry that you represnt.
Best Regards
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Hi,
Am from a chemical manufacturing company. We have a similar policy in place, wherein we have included the following:
Purpose: clearly defined
Employees eligible: who have completed x no of years of service with organisation
Amount eligible for: Can be based as a percentage of basic or x months basic as such
EMI payable: Interest free or subsidized interest and payable in x no of years/month
Approval authorities
The procedure for availing the loan in detail
Form for loan application as annexure
Specify whether the loan will be considered as a perquisite and the calculation for same
General rules in case of separation, pre-closure, cap on the no. of times it can be availed during the tenure of service, etc.
Hope this information is helpful.
Regards,
Anuradha
From India, Pune
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Am from a chemical manufacturing company. We have a similar policy in place, wherein we have included the following:
Purpose: clearly defined
Employees eligible: who have completed x no of years of service with organisation
Amount eligible for: Can be based as a percentage of basic or x months basic as such
EMI payable: Interest free or subsidized interest and payable in x no of years/month
Approval authorities
The procedure for availing the loan in detail
Form for loan application as annexure
Specify whether the loan will be considered as a perquisite and the calculation for same
General rules in case of separation, pre-closure, cap on the no. of times it can be availed during the tenure of service, etc.
Hope this information is helpful.
Regards,
Anuradha
From India, Pune
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Hi,
I am from Construction Industry & we have similar facility, We include undermentioned:
Purpose of Loan: Family Functions/Purchase of house/renovation/emergency
Amount of Loan: Gross salary x 2 (Maximum upto 1 L)
Repayments: 24 Equal EMI, Without any Interest
Eligibility : Confirmed Employees only
We will make an agreement between employee & employer consisting mutual understanding, and take a cheque as surety (must be return after completion of loan)
Hope you it will help you to formulate policy to facilitate your employees through emergency / personal loan
From India, Gurgaon
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I am from Construction Industry & we have similar facility, We include undermentioned:
Purpose of Loan: Family Functions/Purchase of house/renovation/emergency
Amount of Loan: Gross salary x 2 (Maximum upto 1 L)
Repayments: 24 Equal EMI, Without any Interest
Eligibility : Confirmed Employees only
We will make an agreement between employee & employer consisting mutual understanding, and take a cheque as surety (must be return after completion of loan)
Hope you it will help you to formulate policy to facilitate your employees through emergency / personal loan
From India, Gurgaon
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(Fact Check Failed/Partial)-The user's reply is mostly accurate. However, it's important to note that in many jurisdictions, charging no interest on employee loans may be considered a taxable benefit and subject to taxation. It's advisable to consult tax laws to ensure compliance.
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I am from the electrical industry, but we do not have such a policy. Being an ex-banker, I feel that I will be in a better position to reply to your queries. I think that when you are providing a personal loan facility, there is no need to quote the reason, i.e., for house renovation, family function, purchase of a new vehicle, etc. These three types of facilities can be classified as:
1) Personal Loan - for family function, for house renovation - UNSECURED FINANCE
2) Purchase of a new vehicle - SECURED FINANCE
You might be thinking why two loans are classified as Secured & Unsecured, but it is banking terminology and in your case, both loans are secured as you are financing to your permanent employees only.
You may not insist on any supporting documents for a personal loan, but I feel they are a must for the purchase of a new vehicle. I think you should check whether the new vehicle is for the usage of the employee himself or for his family member because a vehicle purchased with the company's finance should be for the usage of the employee himself or his/her family members. I don't know whether you are financing 100% or 70% of the vehicle and that too with or without any interest. If your company is financing without interest, then it is a must for you to check the usage of the vehicle. It may be possible that the employee already has a vehicle and is buying a new vehicle for the usage of his/her relative/friend from whom he may charge interest to create a new source of income. I think you should be vigilant while financing a personal loan too. In a personal loan, you may set a rule that it will be available only after completion of the tenure and not in between where an employee closes his loan before the stipulated tenure.
I am enclosing herewith a format of the application for a vehicle loan for your reference. You should obtain the following listed documents before disbursement and after disbursement for a vehicle loan:
1. Quotation of the vehicle stating ex-showroom price and on-road price - before disbursement with the application.
2. Advance if any paid by the employee (if you are financing 100% of the ex-showroom price then necessary, and if you are financing 100% of the on-road price then not required) - before disbursement with the application.
3. Copy of the Registration Certificate of the vehicle with the company's hypothetical charge - Post disbursement.
4. Cover note of insurance of the vehicle with the company's hypothetical charge - Post disbursement.
I think you should obtain a Hypothetical Agreement of the vehicle which should be signed by both the employee and employer over and above your normal documents. Presently, I am not having, but I will provide you in due course of time.
A. Prakash
From India, Halol
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1) Personal Loan - for family function, for house renovation - UNSECURED FINANCE
2) Purchase of a new vehicle - SECURED FINANCE
You might be thinking why two loans are classified as Secured & Unsecured, but it is banking terminology and in your case, both loans are secured as you are financing to your permanent employees only.
You may not insist on any supporting documents for a personal loan, but I feel they are a must for the purchase of a new vehicle. I think you should check whether the new vehicle is for the usage of the employee himself or for his family member because a vehicle purchased with the company's finance should be for the usage of the employee himself or his/her family members. I don't know whether you are financing 100% or 70% of the vehicle and that too with or without any interest. If your company is financing without interest, then it is a must for you to check the usage of the vehicle. It may be possible that the employee already has a vehicle and is buying a new vehicle for the usage of his/her relative/friend from whom he may charge interest to create a new source of income. I think you should be vigilant while financing a personal loan too. In a personal loan, you may set a rule that it will be available only after completion of the tenure and not in between where an employee closes his loan before the stipulated tenure.
I am enclosing herewith a format of the application for a vehicle loan for your reference. You should obtain the following listed documents before disbursement and after disbursement for a vehicle loan:
1. Quotation of the vehicle stating ex-showroom price and on-road price - before disbursement with the application.
2. Advance if any paid by the employee (if you are financing 100% of the ex-showroom price then necessary, and if you are financing 100% of the on-road price then not required) - before disbursement with the application.
3. Copy of the Registration Certificate of the vehicle with the company's hypothetical charge - Post disbursement.
4. Cover note of insurance of the vehicle with the company's hypothetical charge - Post disbursement.
I think you should obtain a Hypothetical Agreement of the vehicle which should be signed by both the employee and employer over and above your normal documents. Presently, I am not having, but I will provide you in due course of time.
A. Prakash
From India, Halol
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(Fact Checked)-The information provided in the user reply about classifying personal loans as unsecured and vehicle loans as secured, and the documentation required for vehicle loans is correct. (1 Acknowledge point)
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What is the amount of loan being planned?
How will you tackle any case of an absconding employee?
What is the aim of this personal loan facility?
How do you intend to verify the end use?
Look around and see how other companies that have this policy are handling the matter.
Analyse the pros and cons.
From India, Pune
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How will you tackle any case of an absconding employee?
What is the aim of this personal loan facility?
How do you intend to verify the end use?
Look around and see how other companies that have this policy are handling the matter.
Analyse the pros and cons.
From India, Pune
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(Fact Checked)-The user reply covers important considerations for implementing a Personal Loan facility. It aligns with best practices in HR and management principles. (1 Acknowledge point)
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Template - Loan Policy.doc
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(Fact Checked)-The reply provided is accurate and comprehensive in detailing the key components of a personal loan policy for employees in a chemical manufacturing company. (1 Acknowledge point)