Grant of Interest Free Loans to Government Servants Who Don’t Receive Interest on Provident Fund Deposits

According to Sl. No. 5 of ESTA CODE & Finance Division O.M.No.F.6(1)-R-8/74 dated 18-10-1975, there is facility of Grant of Interest Free Loans to Government Servants Who Don’t Receive Interest on Provident Fund Deposits. Detail is as under:

Under the existing rules, interest is not credited by Government to the Provident Fund Account of a Muslim subscriber if he does not wish to receive it. The question of the grant of interest free loans to such subscribers had been under consideration of the Government for some time past. It has now been decided that no interest may be charged by Government on the house building advance and conveyance advances drawn by a Government servant whose deposits in the Provident Fund account carry no interest, subject to the following conditions:-

(i) The Government servant has not received interest on his Provident Fund accumulations prior to the drawal of the advance from the Government;

(ii) The interest to be remitted under these orders shall not exceed the amount of interest foregone by the Government servant concerned on his Provident Fund Account upto the date on which the interest on Government loans would become due for payment;

(iii) If at any time in future the Government servant who has availed himself of this concession chooses to take interest on his Provident Fund deposits, he will be required to pay in full to the Government the amount of interest accrued on the advance drawn by him from the Government.

  1. The above decision will also be applicable in the case of Government servants who have already drawn advances from the Government but the recovery of interest charges accrued thereon has not been made from them.


Interest Free Loans

Interest Free Loans Government


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16 thoughts on “Grant of Interest Free Loans to Government Servants Who Don’t Receive Interest on Provident Fund Deposits

  1. shaikh Muhammad Farhan · Edit

    AOA Madam I have applied for Car loan in my organisation which will soon be granted .
    I have been granted BPS 17 without post as per department policy policy.
    Do I have to pay interest on loan as i am not a gazetted officer only getting salary.
    Please send me related governments letters regarding government loan policy.
    Also send me government letter regarding grant of interest free loan to employees not taking interest on GP fund.
    What is the procedure of getting interest free loan as i am receiving interest on GP fund.
    Do I have to apply after loan sanctioned for interest free loan and freezing interest on GP fund.
    I will be highly great full for your support in this matter.
    Shaikh Muhammad Farhan

  2. Working in BS-17, in Federal Govt.

    When I applied HBA I was getting interest in my pay from GP Fund. ….. But 3-month before sanctioned of HBA …. I applied interest free GP Fund and got a interest free Pay Slip before getting HBA fund …….. and AGPR issued me interest free pay Slip.

    After that i got HBA ……….So what should be treatment of Interest on HBA ….. will i pay interest or not even then I drawal/sanctioned after 3-months of interest free pay slip from AGPR ………

    Plz also tell me how long period required for interest free HBA ………………

    … plz plz tell me with reference or example thx

  3. Dear

  4. Thanks for your expeditious reply can you provide me the copy of the letters declaring that Motor car advance is on the basis of basic and not BS-17, I shall be highly thankful.

  5. May Allah bless you for creating such a supporting site for all govt employees. I am asking you about an issue to kindly guide me whether Motor Car advance is admissible to BS-17 & above only OR it is admissible on the basis of basic pay i.e. Rs. 40,000/- onward. Your kind guidance would be highly appreciated.

  6. I am a government employee how can i apply for the said loan and which bank would give interest free loan to the government employees?


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