Employee Loan Requests in IT Firms: How Can We Create a Fair Eligibility Policy?

I am working with an IT firm as an HR Executive. In our organization, employees frequently apply for personal loans. We want to overcome this problem and implement a policy for the same. Can anyone guide me on employee loan eligibility in the organization?

Hi Rupali, good to see your post here.

Suggestions for Loan Application Criteria

The top management can make the application criteria more stringent. The loan amount could be lowered, or the tenure of service needed to apply for the loan could be increased.

Regards

You can create a policy for loans and include a clause stating that employees who have completed 2 or 2.5 years of service will be eligible for a one-time loan amount in a year. The loan amount should be more than two times the individual's take-home salary and should be repaid within the year. Other clauses will be as per your management decision.

Regards

Hi Rupali, I've drafted a policy for my company and am sharing certain modules (one or two conditions) of the same which might help you in your company. You can further review it for addition/correction/amendment as per your company's criteria. It might seem a little stringent, but with a problem like yours, you can do so:

COVERAGE & ELIGIBILITY

Coverage of Loan: The following are the types of loans covered under this scheme:
- Housing Loan/Home Loan
- Health/Hospitalization Loan
- Vehicle Loan
- Marriage Loan

Loans not mentioned above will be placed before the Director for consideration. Any tax liability pertaining to such loans will be borne by the employee.

Eligibility: All permanent employees of the company who have completed 5 years of continuous service with the company. Various cases where employees are not eligible for a loan are:
- Unprofessional conduct against the company's rules
- Verbal arguments leading to the use of abusive language
- Continuous or frequent absenteeism without a genuine reason
- Not respecting the management policy

ADMINISTRATIVE MODULE

An employee can re-apply for a loan after 3 years from the date of complete repayment of their first loan. The amount of the loan will not exceed 3 times the employee's gross monthly salary or Rs. 100,000, whichever is lower.

Hope these conditions might serve your purpose.

Regards