Loan applications for government employees; basic salary and Allowances Eligibility
February 28, 2019
All standing or fixed allowances, basic salary, after net of income tax and pensions are considered in the computation for loans eligibility
The Ministry confirms that all standing or fixed allowances are considered in the computation for loans eligibility, along with the basic salary, after net of income tax and pensions.
Following concerns raised by several government employees, regarding difficulties in securing loans from banks, the Ministry of Finance, Trade, Investment and Economic Planning, MFTIEP, has clarified the matter with all the banks in the country.
Employees are claiming that banks do not recognise allowances, and are therefore not included in the overall amount in the computation for eligibility of loans, along with their basic salaries, after net of income tax and pensions. Some banks might require a minimum of 6 months’ pay slips as evidence to show that these payments are consistent.
It is to be noted that only periodic payments, such as overtime, or acting allowances are not included in the affordability of calculating loan eligibility, in view that they are not consistent and cannot be guaranteed over the normal tenor of the credit facility.