University Grants Commission - Sri Lanka

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Commission Circular No: 895

27th November, 2007.


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



After having considered the urgent need of adopting a common policy in safeguarding the retirement benefit concept of the Universities Provident Fund the University Grants Commission at its 745th meeting held on 07th November 2007, decided to implement the under mentioned course of action in this regard. It is reported that Higher Educational Institutions adopt different methods and different percentage levels when Provident Fund is considered as security for granting loans, executing bonds and agreements and selecting guarantors. In this regard the Commissioner of Labour has informed the UGC, that the retirement benefit concept should be safeguarded when using Provident Fund as security.

Therefore all the Higher Educational Institutions should strictly adhere to the following guidelines when Provident Fund is kept as security for various purposes.

1. Provident Fund Loan should always be limited to a maximum of 65% of the Provident Fund balance lying to the credit of a contributor according to the last Provident Fund statement issued by the University Grants Commission.

2. Total value of liabilities viz; all the loans, ( including Provident Fund Loan) bonds , agreements and guarantees should not exceed 75% of the total Provident Fund of a contributor at any given time.

3. Employees who are on extension of service (after 55 years) should not be allowed to sign as guarantors assigning their Provident Fund as security.

4. Higher Educational Institutions should make every attempt to recover whatever liabilities from an employee while he is in service. Any dues to the University such as Library dues, Telephone charges , Medical dues, Losses and Damages, No pay leave and Over payments, etc; should be recovered while the employee is in service. HEIs should not allow liabilities to accumulate until the employee ceases to be in employment and advise for recovery from Provident Fund. Only under extremely unavoidable circumstances should recoveries be made from the Provident Fund, with the contributors written consent, subject to the provisions of the existing circulars.

5. All the Higher Educational Institutions should ensure that a minimum of 25% of the Provident Fund of an employee, is always kept untouched. Except under very exceptional situations the HEIs should not advise the UGC to recover any liabilities over the 75% limit.

6. Pension Fund contributions should not be kept as security for any purpose.

This circular will come in to force with immediate effect.

Prof. S.V.D. Gamini Samaranayake


Copies to:

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. Chief Internal Auditor/UGC
10. Accountant/UGC
11. Deputy Accountant/UGC
12. Snr.Asst./Asst. Internal Auditors of Universities
13. Snr.Asst. Secretary/ Personnel
14. Asst. Accountant/Pension
15. Auditor General




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