Freezing order does not apply to EPF, PPF, NPS balance

Now no bank in India can attach the balances under these financial schemes, to compensate for loans that have not been repaid.


It is a common practice for banks to claim the assets of a person who has failed to repay a loan. Property, shares, mutual funds and similar assets are usually claimed by the bank against an attachment order by the court, to make up for the loan amount that the person has failed to repay. Such freezing orders make it impossible for the person to either use or sell the attached assets that the bank has claimed. However, Employee’s Provident Fund (EPF), Public Provident Fund (PPF) and National Pension Scheme (NPS) have now been provided legal protection from such freezing orders.

No Indian court can attach the balance available in a person’s EPF account or Employee’s Pension Scheme account, as it is protected under Section 10 of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. The EPF account comprises the money the employee has accumulated during his employement via the deposition of 12 per cent of the basic salary and dearness allowance as the employee’s contribution and 8.33 per cent towards EPS and 3.67 per cent towards EPF as the employer’s contribution. This accumulated amount provides security to the employees in their post-retirement years.

Similarly, the amount in the Public Provident Fund (PPF) is given legal protection under Section 14A of the Government Savings Act, 1873. The yearly contribution towards this fund can be anywhere between Rs 500 and Rs 1.5 lakhs. All Indians residing in the country, irrespective of whether they work in the organised or unorganised sector can contribute towards this. This long-term investment is also a means of providing security after retirement.

Yet another account that is legally protected is the National Pension System (NPS). It is covered by Section 6(a) of the Pension Fund Regulatory and Development Authority of India (PFRDA) (exits and withdrawals) Rules, 2015.

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