Financial Emergency: Withdraw your EPF or Take a Personal Loan

Financial emergency can come uninvited. Financial emergency can be in the form of a sudden medical expense, wedding expenses etc. If you don’t have enough savings to finance any unforeseen contingency, then you can borrow money for the same. Besides borrowing money there is another option of withdrawing your EPF.

EPF stands for ‘ Employees’ Provident Fund’. Under this scheme, the employee pays a fixed monthly contribution towards the scheme based on his basic salary and same equal contribution is paid by the employer. EPF provides financial security on retirement as the total amount paid by employee and employer is received by the employee along with interest on retirement. In case of any financial emergency, you can withdraw partial money as per your requirement from your EPF account during your job.

Let us discuss the situations when you can borrow loan from your EPF Account


You can withdraw money from your EPF to finance your higher education plan or for financing your children’s education etc.


Marriage is another reason for which you can withdraw money from your account. EPF money can be used for meeting your own marriage expenses or your son’s or daughter’s wedding expenses etc.

Medical Bills

A medical emergency can come any time in life. Though we all save to meet these sudden expenses, these may not be enough. In such a situation, you can use your EPF to pay for the medical bills.

For Buying Home

Buying your own home requires a big amount of funds. If you don’t have enough funds for the same, you can take a home loan. But you will not get the entire amount as a loan, you have to make a down payment as well. EPF can be used for making down payment.

Natural Calamity

Natural calamities like floods, droughts can occur anytime and anywhere. Natural calamities come with huge financial loss. EPF money can be withdrawn in such a situation.


Sometime your firm may close down without any prior notice due to any reason like big losses etc. EPF has provision wherein if an employee does not receive his salary for 2 months continuously or the firm he works for shut down, then he can withdraw money from the EPF to finance his expenses.

Usually, monthly EPF contribution is made to secure our future and to reduce financial dependency on others at the time of retirement. Though you can partially withdraw EPF fund to finance any of the situations discussed above. The main advantage of using EPF money is that you don’t have to repay it as these are your own savings. But my suggestion is taking a personal loan is a better option. This is because EPF provides you financial security at the time of retirement. You may not have any other source of income after retirement or you may face any of the issues discussed above any time in future again. At that time you can utilize EPF money. At the age of retirement or after retirement, many banks may not advance you a loan. Even if they advance you a loan, you may not have a regular and stable income to repay it. Hence, taking a personal loan is better. There are many banks and NBFCs offering personal loan in India. For quick and easy approval, you can apply for a personal loan online with the lender of your choice.

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