Car and Computer loan granted under GFR, 2005

General Financial Rules 2005, provides for interest bearing advance that can be granted to a Central Government Employee for purchase of Car and Computer.

The advance for the purchase of a motor car shall be granted to those Government servants whose pay in pay band is Rs.19,530/-per month or more. (Rule 17)

Click here to read the office Memorandum F.No: 12(1)/E.II-A/2008 dated 24.10.2008 for revised eligibility details consequent on implementation of 6CPC.

Features of Car loan:

An advance for the purchase of a conveyance shall not be granted to a Government servant, who has already purchased the conveyance and paid for it, unless the conveyance has been purchased within a period of three months commencing from the date the advance was applied for, and has been paid for by raising a temporary loan. (Rule 18)

A simple interest at rate of 11.5% is payable by the employee for the car loan obtained by him ( Rule 20)

The total amount of advance which may be granted to a Government servant for the purchase of a motor car for the first occasion shall not exceed Rs. 1,80,000 (Rupees One lakh eighty thousand) or eight months' basic pay of the Government servant taken together, or the anticipated price of the motor car, to be purchased by the Government servant, whichever is the least. (Rule 21(1))

The quantum of advance that may be granted on the second or subsequent occasions for the purchase of a motor car shall not exceed Rs. 1,60,000 (Rupees One lakh sixty thousand) or eight months' basic pay of the Government servant taken together, or the anticipated price of motor car to be purchased, whichever is the least. (Rule 21 (2))

Such second or subsequent advances for the purchase of a motor car will be admissible only after four years, reckoned from the date of drawal of the last advance, have elapsed.

Provided that this restriction of 4 years shall not apply in the following cases:

• Where an advance had been allowed earlier for the purchase of a motor cycle but it is desired to draw the advance for the purchase of motor car.
• Where a Government servant disposes of his motor car in India prior to his posting abroad or deputation/training abroad lasting more than one year and returns to India without a motor car.
• Where a Government servant is appointed to a regular post abroad and does not take his motor car along with him.

Repayment:

The amount of advance granted to a Government servant for the purchase of motor car shall be recovered by not exceeding 200 equal monthly installments . The employee may at his option repay more than one installment in a month. (Rule 23)

The EMI (Equal Monthly Installments) will be deducted from the first salary paid after loan is taken. (Rule 24)

Recovery of Interest:

The amount of interest payable for the loan taken shall be recovered in the minimum number of monthly installments after recovery of loan amount. The amount of each such installment being not greater than the amount of the installment fixed under Rule 23. (Rule 25)

The recovery of the amount of interest shall commence from the month immediately following that in which the repayment of the advance for the purchase of a motor car is completed. (Rule 26)

Sale or Transfer

A Government servant shall not sell or transfer a motor car for so long as the amount of advance together with the interest on such amount is not completely repaid, except with the permission of the competent authority. (Rule 27)

Unless Government servant, who is sanctioned an advance for the purchase of a motor car, completes the purchase of, and pays for, the motor car within one month from the date on which he draws the advance, he shall refund forthwith the full amount of the advance drawn together with interest on that amount for one month. (Rule 28)

Agreement and Mortgage Bonds.-A Government servant shall, before he draws an advance for the purchase of a motor car, execute an agreement in Form II of the Compendium, if the advance is granted to him under Rule 17, or in Form III, if the advance is granted to him under Rule 18. On completing the purchase of a motor car, he shall also execute a mortgage bond in Form IV and/or Form V, as the case may be, hypothecating the motor car to the President as security for the advance. (Rule 29)

Features of Computer Loan:

A Government Employee who is entitled for car loan will also be eligible for Computer loan of amount not exceeding Rs.80,000 (and Rs.75,000 for the second loan) (Rule 21 (5)).

Other Government employees whose pay in pay band is Rs.8560 or more are eligible for computer loan of amount not exceeding Rs.30,000 or anticipated price of Computer whichever is less. Click here to read Office Memorandum No: 12(1)/E.II-A/2008 dated 12.12.2008 for revised eligibility as per 6CPC

Conditions of sanction

• The Government servant, who has already drawn an advance for purchase of a personal computer and a period of 3 (three) years has not elapsed from the date of drawal of the earlier advance, shall not be eligible for the grant of second or subsequent advance for the purchase of a personal computer.
• The personal computer will be required to be mortgaged in the name of the President and for this purpose Form IV of the Compendium, may be used by substituting the words 'motor vehicle' with the words 'personal computer'. Similarly, Forms of Agreement for drawing an advance for the purchase of motor car may be used by substituting the words 'motor vehicle' with the words 'personal computer'. Make, Model and Chassis No. of the personal computer may be entered in the Mortgage Deed.
• An application for the grant of advance for the purchase of a personal computer shall be required to be made in Form VI of the Compendium.

Repayment of computer loan:

The advance sanctioned for the purchase of a personal computer shall be recovered in such number of equal monthly installments as the Government servant may elect, but not exceeding 150.

Total recoveries on account of all advances including computer advance, taken by a Government servant shall not exceed 50% of the total emoluments.

Rate of Interest applicable for Computer loan:

Simple interest at such rates as may be fixed by Government from time to time for the motor car advance shall be charged on advance granted to Government servants for the purchase of personal computer.

All other conditions laid down in this Compendium, regulating the sanctioning of motor car advance will apply to the advance which may be sanctioned for the purchase of a personal computer.

For more details and for application forms download Compendium of Rules of advances under GFR, 2005, issued by Finance Ministry