The labour ministry plans to approach the Prime Minister's Office with its proposal to allow Employees' Provident Fund Organisation subscribers to pledge their future provident fund contributions to buy low-cost houses, after having run into opposition from the urban development ministry.
Officials told ET that the ministry hopes to be able to route its plan through the PMO because it complements Prime Minister Narendra Modi's vision of `Housing for All'.
The ministry will soon make a presentation to the PMO on the proposal, after which it will be moved for interministerial consultation, a senior official said, requesting not to be identified.
“The effort is to take the PM on board before we move to interministerial consultation because once approved by PM the proposal is likely to go through,“ the official said.
As per the proposal, first mooted last year following recommendations of an expert committee, EPFO subscribers will be allowed to take 20% of their contribution as advance from their PF corpus and pay the balance cost of the house through equated monthly instalments from their future PF contribution.
However, the ministry plans to cap the limit of future PF contributions going as EMI against housing loan to ensure that some money is saved for the subscribers' social security post retirement.
“The modalities of the scheme are still being worked upon and the ministry is likely to finalise the proposal very soon,“ the official said.
The financing of houses to give EPFO subscribers will be done under a tripartite pact with the subscriber, bank or housing agency and EPFO for pledging future PF contributions as EMI payment while state run National Buil dings Construction Corporation is expec ted to do due diligen ce of the houses constructed.
Benefits under a Benefits under a scheme of the housing and urban poverty alleviation ministry can also be extended to the beneficiaries of the scheme to make it more robust.The proposal is to allow EPFO subscri bers purchase a dwelling unit with loans from banks or housing finance companies and hypothecation of property in favour of the latter. The expert committee had suggested this scheme only for low income formal workers who are EPFO subscribers and are unable to buy a house during their entire service period, a point that is still under the labour ministry's consideration.
The Economic Times New Delhi, 27th May 2016
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