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University Grants Commission - Sri Lanka

Finance Circular Letter No. 6/2007

31st August, 2007

Vice-Chancellor of Universities,
Directors of Institutes,
Rectors of Campuses.



The University Grants Commission at its  739th   meeting held on   09th   August  2007  has decided to allow University Employees to renew the Provident Fund Loan subject to the following conditions.  All the previous circulars issued in connection with the Provident Fund Loan are rescinded herewith .


i.          Only permanent  employees who have been confirmed in their posts will become eligible for this loan.   Employees on probation with continuous  service but who have been previously confirmed in another post in  the  University service are also  eligibile.

ii.         The Provident Fund loan can be renewed only after a lapse of 12 months from the date of the last loan.

iii.        Those who have already obtained a Provident Fund Loan within the current year up to end of  August  2007,  are eligible  to renew the loan under the provisions of this circular, only after 01st January, 2008.

Criteria  to be followed in deciding the Quantum of  the Loan

i. Amount equivalent to 48 months salary of the contributor

An amount not exceeding 65% of the Provident Fund balance lying
to the credit of the contributor, whichever is less.      (In  any   case  the  requested  loan  should  not  exceed  the   total Provident  Fund  balance  shown  in  the last issued Provident Fund  statement.)

ii          Monthly deductions (including other recoveries ) should not exceed 60%  of the salary.  It will be the responsibility of the Higher Educational Institution to determine the quantum of the loan subject to the above conditions.

iii.         All the monthly installments due from the previous Provident Fund loan  should have been recovered continuously.  After having recovered all the due installments without any interruption up to the month before which the loan is re-applied  for, only the remaining loan  balance may be set off against the new loan.

iv.         Transferred  employees should start the repayment of the Loan effective from the date of such transfer.  If there are any unpaid installments , all the arrears should be settled,  and remitted to the University Grants Commission.  Such persons become eligible for the loan renewal only in the month following in which the University Grants Commission receives the entire arrears.

v.          Those employees who are unable to obtain the maximum Provident   Fund   loan within the 60% deduction limit due to other loan commitments, are also given the option to settle the other loans (such as Distress, Transport, loan etc.) out of the Provident Fund Loan.

This loan is recoverable in 120 installments.

Other Conditions Governing  the Grant of Provident Fund Loans

(i)         No funds will be released for Provident Fund loans, unless the following documents and diskettes are submitted to the Finance Branch of the University Grants Commission on or before the dates specified below.

(a) Provident Fund Contribution cheques and loan instalment cheques upto the end of the previous month
-    on or before the 10th of the month in which loans are applied for.
(b) Loan recovery list and the diskette of the previous month
-    on or before the 15th of  the month in which loans are  applied for.
(c) Provident Fund contribution list and the diskette of the previous month
-    on or before the 30th of the

(ii)        Higher Educational Institutions should ensure that every applicant's  Provident Fund Number, Name, Provident Fund Loan balance and the Provident Fund balance tally with the annual Provident Fund statement issued by the University Grants Commission.  Discrepancies if any, should be reported to the Commission,  and loan applications should be submitted only after such discrepancies are rectified.  Loan applications sent together with requests for name changes would be rejected.

(iii)       If the applicant refuses to accept the loan after funds are released by the University Grants Commission, he or she will forfeit the right to get  another loan for the next 12 months.  Special attention should be paid to this at the time of deciding the quantum of loan and requesting for funds.  It is very essential to bring this to the attention of all the employees.

(iv)       When requesting for funds to grant Provident Fund loans, every University/ Higher Educational Institution must ensure that they submit their requests to the Finance Branch of the University Grants Commission on or before the 15th of every month. All loan  requests received thereafter, would be processed in the following month.   A Higher Educational  Institution should send only one request per month, for the release of funds.
All applications for Provident Fund Loans, must be submitted in the annexed specimen format.

(v)        Funds released for the purpose of granting loans should  not be returned to the University Grants Commission under any circumstances.   Money released out of the Provident Fund to grant loans should be paid to the employees immediately and recoveries should necessarily commence from the following month.

(vi)       It is compulsory that the loan installments are recovered every month until the loan is fully recovered.  Recoveries should not be suspended  for any reason, without the approval of the UGC.   Further Provident Fund loans will not be granted to those employees from whom regular installments have not been recovered.  Higher Educational Institutions  should refrain from requesting loans for such employees.  These employees should first settle all the arrears of outstanding installments by paying in cash and thereafter, the remaining loan balance could be set off against the new loan.  Only those who have been on  approved no-pay leave are exempted from this requirement.  They become entitled for renewal of the Provident Fund loan only after resumption of duties and after deduction of three consecutive monthly installments of the previous loan from their salaries.  An endorsement should be made in the loan request, against the name of the applicant, if the applicant had been on no-pay leave.  If  interdicted employees are  reinstated with back wages, all outstanding loan installments should be recovered at once from the back wages paid to such employees, and remitted to the University Grants Commission.

General  Instructions

(i)         Every Provident Fund refund document furnished to the University Grants Commission must expressly state whether or not an employee has obtained a loan from the Universities' Provident Fund.

(ii)        When a person is transferred, it is the responsibility of the Bursar to ensure that the outstanding loan balance and installment details are communicated to the new place of work without any delay.

(iii)  The Labour Commissioner has granted permission to renew the existing  Provident   Fund   Loan   within   the   concept  of the  Provident Fund  being    a " Retiring Benefit ". Hence the guidelines of this circular should be strictly adhered to by the officers concerned.   It is essential that all borrowers  should be enlightened on the conditions governing the Provident Fund  Loan.

It is the responsibility of the Authorized Financial Officer to ensure that Provident Fund Loans are approved strictly according to the provisions of this circular.

This circular is effective  from   1st  September  2007.

This circular together with all annexes  and schedules are available for downloading at

Prof. S.V.D.G. Samaranayake


  1. Chairman/UGC
  2. Vice-Chairman/UGC
  3. Secretary/UGC
  4. Financial Controller/UGC
  5. Registrars of Universities
  6. Bursars of Universities
  7. Snr.Asst./Asst.Registrars of Institutes/Campuses
  8. Snr.Asst./Asst.Bursars of Institutes/Campuses
  9. Snr.Asst. Internal Auditors of Universities/Institutes
  10. Accountant/UGC
  11. Chief Internal Auditor/UGC
  12. Deputy Accountant/UGC
  13. Snr.Asst. Secretary/ Personnel/UGC
  14. Asst.Accountant/Pension/UGC
  15. Auditor General