EMERGENCY LOAN DISBURSEMENT

EMERGENCY LOAN DISBURSEMENT 

1.    PURPOSE

The Company had discontinued Loan Disbursements to employees in the past one year due to various reasons. Company now wishes to bring new loan disbursement program. However, this program is purely for various emergency purpose. Under the program, emergency loans are eligible to employees for reasons of a severe financial hardship for which the employee has an immediate need for financial assistance. There may be occasions when emergency circumstances, defined as unforeseen, unplanned and unavoidable events or for which no external loan disbursement channel/source exists, demand immediate attention and require an employee to secure funds on short notice. Examples include a family medical emergency, threatened foreclosure or eviction from a primary residence, or termination of utilities or marriage of daughter/(s), sister(s), or medical emergency support for dependent parents.

2.    SCOPE, ELIGIBILITY & COVERAGE

a)     Coverage: It shall apply to employees of all Units and subsidiaries which are under direct management and control of STL (the “Company”).

b)    Eligibility: It shall extend and cover all employees having permanent employment in the Company and who have served for atleast 24 months in the Company.

c)     Threshold limits: The maximum amount of Loan which could be disbursed in each year for a Unit would be 5% of the total Personnel Cost of the Unit as per last year’s audited accounts.

d)    Quantum: The maximum amount of Loan to be disbursed to any employee in need of Loan shall not exceed 3 (three) months of Basic plus HRA plus special allowance.

e)     Tenor: The loan shall be for a tenor of maximum 12 months.

f)     Interest Rate: The Loan shall be subject to a minimum interest rate which is not less than the average weighted interest cost to the working capital borrowings of the Company prevailing at the time. Currently interest rate shall be 11% per annum. However, no interest shall be charged if the tenor of the Loan is one month, which shall be treated as an Advance Salary.

g)    Repayment: The Loan shall be repayable on equitable monthly installments alongwith the interest at the prevailing rates as a Payroll deduction.

h)     Loan Frequency: There shall be a period of one year lapsed for any employee to seek fresh Loan, which shall be called the “cooling-off” period.

i)      Tax Liability on Employee as perquisite: Any tax liability arising on the employee as a perquisite shall be borne by the employee.

j)      Tax Liability on Company as disallowance:  Any tax liability arising on account of such disbursement of the Loan, the Company shall be recovered from the employees on pro-rata basis. 

k)     Termination: The outstanding balance due will be due and payable in the final paycheck if an employee terminates his/or her employment or ceases to be in employment with the Company for any reason before the entire loan is repaid.

l)      Loan Approval Authority: Recommended by the Departmental Head to the Unit Head, who shall be the approval authority.  

3.    PROCEDURE

Request: Employee contacts the Department Head through his reporting senior to apply for an Emergency Loan. Employees requesting an emergency loan must submit an Emergency Loan Request and Authorization for Payroll Deduction Form, which includes identifying information, the circumstances of the request, the amount requested, the proposed plans for repayment using payroll deduction, and a statement of loan terms. The employee shall document there are no other resources available for financial assistance, including his/her lending bank.

Approval Documentation: Loan requests recommended by the Department Head to the Unit Head will be documented on the Emergency Loan Request and Authorization for Payroll Deduction Form. The form is signed by the borrowing employee to indicate agreement with the loan terms and the obligation to repay.

Disbursement: An Emergency Loan account will be administered by the office of Human Resources at the Unit Level. Upon approval, the Unit HR Head will initiate a Cheque Request. The Check Request shall be supported by the Emergency Loan Request and Authorization for Payroll Deduction Form. The Unit HR Head will ensure that payroll deductions are taken and documentation (authorization for payroll deduction by employees) is maintained. Payment to the employee for the loan amount will be within two business days.

Payment of Loans: Loans are repaid through payroll deduction. A copy of the Emergency Loan Request and Authorization for Payroll Deduction form is sent to the Unit Finance & Accounts Head to revalidate that payroll deduction has indeed taken place as per the authorization.

Determination of Threshold Limits and its control: The Chief Financial Officer shall determine the threshold limits upto which a Unit shall be entitled for Emergency Loan disbursement to its employees. Such threshold limit shall be communicated to the Head-Human Resources of the Company who in turn shall communicate to his functional reportees at the Unit. The Unit HR Head and the Unit Finance & Accounts Head shall both be responsible and accountable jointly for any breach of such threshold limits.

Loans Receivable Records: The Unit HR Head shall maintain all loan disbursed and repayment records. A monthly MIS of such loan disbursed, their deduction and repayment records shall be sent to Head-Human Resources of the Company after due reconciliation of available threshold limits and outstanding loans. Such MIS shall be jointly authenticated by the Unit’s Finance & Accounts Head.

4.    RESPONSIBILITY

Vice President-Human Resources of the Company shall update the policy in consultation with the CFO/COO.