Dear Friends, Can anyone let me know the difference between Loan opolicy and advance policy? . I am a bit confused on that ...Also need templates for the same . Thanks and Regards, Anuja
From India, Pune
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4From India, Pune
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Dear Anuja,
"Loan" refers to a significant amount of money provided to the employee for a specific/valid reason.
Few standard clauses in a loan policy are:
Minimum years of service rendered (e.g., 3 or 5 years)
No history of pending loans
Eligibility will be based on grade/monthly basic or gross salary.
Reasons for applying for a loan might include education, marriage, housing, or hospitalization.
The total loan amount will be divided into EMIs (with or without interest, depending on company policy) and deducted in equal installments from the employee's salary.
"Advance" is an insignificant or smaller amount provided to an employee to meet petty personal expenses in case of a contingency.
In normal instances, an advance will only be a small percentage of the salary and will be deducted from the next salary disbursement.
The company may also offer travel advances, which must be repaid by the employee with detailed explanations and necessary support within a stipulated timeframe.
Hope this information is clear.
From India, Mumbai
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"Loan" refers to a significant amount of money provided to the employee for a specific/valid reason.
Few standard clauses in a loan policy are:
Minimum years of service rendered (e.g., 3 or 5 years)
No history of pending loans
Eligibility will be based on grade/monthly basic or gross salary.
Reasons for applying for a loan might include education, marriage, housing, or hospitalization.
The total loan amount will be divided into EMIs (with or without interest, depending on company policy) and deducted in equal installments from the employee's salary.
"Advance" is an insignificant or smaller amount provided to an employee to meet petty personal expenses in case of a contingency.
In normal instances, an advance will only be a small percentage of the salary and will be deducted from the next salary disbursement.
The company may also offer travel advances, which must be repaid by the employee with detailed explanations and necessary support within a stipulated timeframe.
Hope this information is clear.
From India, Mumbai
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Dear Sriram,
Thank you for your prompt reply. Now I know that I need to frame a loan policy for an organization. Just a little bit more help, could you please let me know what is the standard percentage for availing a loan, for example, is it 1.5 times of gross or basic salary, or 2 times, etc.?
Regards,
Anuja
From India, Pune
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Thank you for your prompt reply. Now I know that I need to frame a loan policy for an organization. Just a little bit more help, could you please let me know what is the standard percentage for availing a loan, for example, is it 1.5 times of gross or basic salary, or 2 times, etc.?
Regards,
Anuja
From India, Pune
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Anuja,
Normally, it used to be 2 times the Gross Salary or a specific amount, whichever is lower. Repayment Time Frame: 10 Equal Installments from the subsequent month. Interest Rate: Depending on the company policy, some companies charge 10% - 12% interest. For instance, if a company has a policy of 2 times the Gross/Month or Rs 25,000, whichever is lower, as the eligible loan limit. Employee A, with a Gross Salary of Rs 10,000/Month, will be eligible for Rs 20,000 as a loan. Employee B, with a Gross Salary of Rs 15,000/Month, will be eligible for only Rs 25,000, as the 2 times gross is higher than the fixed limit. Certain companies don't fix any limits but lead to a huge amount being disbursed as a loan; this will adversely affect the liquidity of the company. When you frame a loan policy, be careful with all these aspects and consult the top management regarding the eligibility, time frame for repayment, and applicable interest, if any.
Ensure proper paragraph formatting:
Anuja,
Normally, it used to be 2 times the Gross Salary or a specific amount, whichever is lower. Repayment Time Frame: 10 Equal Installments from the subsequent month. Interest Rate: Depending on the company policy, some companies charge 10% - 12% interest. For instance, if a company has a policy of 2 times the Gross/Month or Rs 25,000, whichever is lower, as the eligible loan limit. Employee A, with a Gross Salary of Rs 10,000/Month, will be eligible for Rs 20,000 as a loan. Employee B, with a Gross Salary of Rs 15,000/Month, will be eligible for only Rs 25,000, as the 2 times gross is higher than the fixed limit. Certain companies don't fix any limits but lead to a huge amount being disbursed as a loan; this will adversely affect the liquidity of the company. When you frame a loan policy, be careful with all these aspects and consult the top management regarding the eligibility, time frame for repayment, and applicable interest, if any.
From India, Mumbai
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Normally, it used to be 2 times the Gross Salary or a specific amount, whichever is lower. Repayment Time Frame: 10 Equal Installments from the subsequent month. Interest Rate: Depending on the company policy, some companies charge 10% - 12% interest. For instance, if a company has a policy of 2 times the Gross/Month or Rs 25,000, whichever is lower, as the eligible loan limit. Employee A, with a Gross Salary of Rs 10,000/Month, will be eligible for Rs 20,000 as a loan. Employee B, with a Gross Salary of Rs 15,000/Month, will be eligible for only Rs 25,000, as the 2 times gross is higher than the fixed limit. Certain companies don't fix any limits but lead to a huge amount being disbursed as a loan; this will adversely affect the liquidity of the company. When you frame a loan policy, be careful with all these aspects and consult the top management regarding the eligibility, time frame for repayment, and applicable interest, if any.
Ensure proper paragraph formatting:
Anuja,
Normally, it used to be 2 times the Gross Salary or a specific amount, whichever is lower. Repayment Time Frame: 10 Equal Installments from the subsequent month. Interest Rate: Depending on the company policy, some companies charge 10% - 12% interest. For instance, if a company has a policy of 2 times the Gross/Month or Rs 25,000, whichever is lower, as the eligible loan limit. Employee A, with a Gross Salary of Rs 10,000/Month, will be eligible for Rs 20,000 as a loan. Employee B, with a Gross Salary of Rs 15,000/Month, will be eligible for only Rs 25,000, as the 2 times gross is higher than the fixed limit. Certain companies don't fix any limits but lead to a huge amount being disbursed as a loan; this will adversely affect the liquidity of the company. When you frame a loan policy, be careful with all these aspects and consult the top management regarding the eligibility, time frame for repayment, and applicable interest, if any.
From India, Mumbai
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Employee reference policy.doc