Loans & Advances

The Loans & Advances module manages employee borrowings -- salary advances, personal loans, housing loans, and vehicle loans. EMI deductions are auto-applied...

2026-02-17 · 2 min

Manual area

People

Coverage

3 sections

Operator notes

1 implementation note

Overview

The Loans & Advances module manages employee borrowings -- salary advances, personal loans, housing loans, and vehicle loans. EMI deductions are auto-applied to monthly payroll.

Creating a Loan

Navigate to Payroll > Loans & Advances > New Loan:

Select the employee.
Choose the loan type: Salary Advance, Personal Loan, Vehicle Loan, Housing Loan.
Enter the principal amount, interest rate (0% for advances), and tenure (months).
System calculates the EMI amount.
Submit for approval: HR > Finance > Management (for amounts above threshold).
On approval, the loan is disbursed and EMI recovery begins from the next payroll cycle.

Tracking & Closure

Monitor loan status:

Loan ledger: principal, interest paid, total repaid, and outstanding balance.
EMI schedule: month-wise EMI breakdown.
Auto-deduction: EMI is applied to payroll every month until the loan is fully repaid.
Prepayment: employee can make partial or full prepayment at any time.
Early closure: close the loan with remaining balance payment.
If an employee exits, outstanding loan balance is recovered from Full & Final settlement.

Notes

Tip

Set a maximum salary advance limit (e.g., 2 months' basic pay) in the policy configuration to prevent over-lending.

Salary Structure

Salary Structure defines the compensation components for each employee -- earnings (Basic, HRA, allowances) and deductions (PF, ESI, TDS). Structures are...

Full & Final Settlement

Full & Final (FnF) Settlement is the financial closure process when an employee exits the organisation. It computes all pending earnings and recoveries to...