New Delhi: India’s retirement fund manager Employees Provident Fund Organisation (EPFO) aims to help one million of its subscribers build or buy homes over the next two years.

The labour ministry-controlled EPFO on Thursday signed an agreement with the Housing and Urban Development Corp. Ltd (Hudco) to help EPF subscribers get hassle-free housing loans. Hudco will also help EPF subscribers avail subsidy under central government schemes.

While the move is likely to help industrial workers, it may also benefit the ruling National Democratic Alliance politically in the run up to the 2019 general elections.

“We are aiming to help 10 lakh EPF subscribers build or buy homes in next two years. The agreement with Hudco is a step in that direction," labour minister Bandaru Dattatreya said on Thursday.

“We are happy that the labour ministry and EPFO has joined us to achieve the housing-for-all goal set up by Prime Minister (Narendra) Modi," said M. Venkaiah Naidu, minister for urban development, housing and urban poverty alleviation.

How will this work out?

“Hudco shall make housing loans available to the eligible members of EPF for buying the housing units/flats through Hudco Niwas, Hudco’s retail financing window as per their eligibility," the agreement document said.

Besides, Hudco will also facilitate eligible subscribers to get credit-linked subsidy under the Pradhan Mantri Awas Scheme. A member can avail subsidy of up to Rs2.67 lakh for buying homes in schemes that are earmarked for economically-weaker sections as well as for lower- and middle-income groups.

Besides, Hudco may also help connect EPF subscribers to its network of builders. “If required, we can connect them to our network (of builders) as well," said M. Ravi Kanth, chairman and managing director of Hudco.

In return, EPFO will provide all relevant details of its subscriber borrowers to Hudco, including details of existing deductions and their available provident fund (PF) corpus. EPFO will give 90% of the already accumulated PF corpus of a member to Hudco, or any other home loan provider chosen by an EPFO subscriber. EPFO will also pledge to give the monthly contribution of subscribers towards payment of equated monthly instalments (EMIs) of home loans.

To be sure, the 1 million target may not happen only through Hudco.

According to the EPFO housing scheme unveiled in April, a group of 10 or more subscribers need to form a society to approach a bank for home loans. Five groups have already approached the fund manager and banks for availing the benefit, central PF commissioner V.P. Joy said.

Besides new home buyers, existing home loan takers can also approach EPFO for getting 90% of their PF corpus for loan repayments and these candidates too will be considered as part of the larger one million target, Joy said.

To prevent loan defaults, Kanth said Hudco will do its own due diligence.

But will EPFO stand guarantee on behalf of a subscriber? The central PF commissioner said EPFO will not be liable to repay loans, late fees or interest on the loan taken by the subscribers. “PF members will remain liable for repayment of loan...as a member borrower of Hudco," the agreement said

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