60% PAY COMMISSION ARREARS FIN-MIN ISSUED ORDER

F.No./2008-IC 
Government of India Ministry of Finance 
Department of Expenditure 

               Implementation Cell Payment of second instalment of arrears on account ofimplementation of Sixth Central Pay Commission'srecommendations. As communicated vide this Department's Resolution No.2008-ICdated 29th August, 2008, the Government had decided that the arrears onaccount of implementation of Sixth Central Pay Commission's recommendationswill be paid in cash in two instalments - first instalment of 40% during the year2008-09 and the remaining 60% in the financial year 2009-10. The first instalmentbas already been paid in 2008-09. It has now been decided that the remaining60% of arrears may now be paid to the concerned Government servants. 

 2. Further, as already stipulated vide this Department's O.M. No.1(2)/ EV/2008 dated 17th August, 2009, in the case of post-01.01.2004 entrantsinto the Central Government, the second instalment of arrears may be releasedonly after individual application forms for registration to the New PensionScheme have been obtained by the DDO/PAO from the concerned Government servant. 

 3. As in the case of the first instalment of arrears, Government servants willbe permitted to deposit their arrears in their GPF Accounts. Though notmandated, Government servants are encouraged to deposit their arrears in their GPF accounts. 

( ALOK SAXENA) 
DIRECTOR

NEW PENSION SCHEME-TO COVER 400 MILLION WORKERS

The Union government, through the Pension Fund Regulatory and Development Authority (PFRDA), is set to introduce new pension scheme aimed to cover a large number of the workers in the unorganized sector. Most of the workers to get benefit from the scheme are illiterate and financially incapable to meet minimum requirements to qualify under any pension scheme. The low cost pension scheme, under which threshold limit has been reduced even below Rs 6000, is expected to cover approximately 400-million workers. Under the new scheme, the threshold has been worked out to the 16 per cent of the annual income of an individual, the limit which most of the workers can easily afford. The new proposals empower an NGO or a self-help group to open an account with the NPS and it would be responsible for choosing investment option suitable for any individual. Workers would have sub account containing all details of transactions. An account holder would have to pay Rs 50 for opening an NPS account besides annual transaction fees of Rs 350 to the National Securities Depository Ltd. A PFRDA official said, "The charges would be the same as that for individual account holders, but it would be paid by the NGO."

LOAN GUARENTER- TO BE OR NOT TO BE

Amit Saxena (name changed) is a software professional who was asked by his friend to be the guarantor for a loan of Rs 2 L. Being a very 'close friend' Amit agreed immediately. Six months through the loan the friend disappeared without any trace and Amit was left with the substantial burden of paying off the loan. This could be a situation where you could be caught up. Many of us at one point in time or other have been asked to be a guarantor for a friend's or relative's loan. Our answer to the request may have been based on any reason. However, in a culture like ours where we are prone to help our friends and relatives, it is important to understand the pros and cons of being a loan guarantor. Who is a guarantor? A guarantor is someone who agrees to be responsible for the payment of someone else's debt should the latter default on payments. It is important to understand that being a guarantor is not a mere formality to help a borrower obtain a loan. The guarantor is equally responsible for paying off the loan. When is it ok to be a guarantor for a loan? Being a guarantor is always risky because you cannot guarantee another person's behaviour. However, since it is very subjective, the decision to be a guarantor should be based on the knowledge of the borrower's financial capability to pay off the loan. When is it not ok to be a guarantor? If you come to understand that the bank is asking for a guarantor because of it is unsure about the borrower's repayment capability, it is important to take a close look and understand the borrower's financial capability yourself. Is being asked for a guarantor an indicator of the credit worthiness of an applicant? While credit worthiness is one of the major reasons a person is asked for a guarantor, it also does not necessarily mean that the borrower's credit worthiness is being questioned. It could be based on other reasons such as: - The applicant has a transferable job - The applicant job's involves frequent travel abroad - Loan is applied at a place other than the applicant's permanent address What can happen if the person who I have agreed to be a guarantor for defaults?When you sign on the dotted line and agree to become a guarantor, you are legally bound to pay off the debts if the primary borrower defaults. If the borrower does default, then: - Banks will hound you to clear the debts - Personal assets such as bank accounts, cash as well as property could be attached (except for provident fund and agricultural land which cannot be attached under any court decree) and you could turn bankrupt - Your credit standing could get affected; which means that if you need any credit in future, your chances of getting the same could be dim. Will being a guarantor impact my chances of obtaining another loan? Yes, it will. Most banks and financial institutions look at the loan that you are a guarantor for, as a loan that you hold. They will therefore deduct that much amount from your loan eligibility. Also, if the borrower has defaulted on some payments during the course of the loan, this also shows up on the guarantor's credit history. This can additionally reduce your chances of getting a loan. How should I decide whether to be a guarantor or not? An important question to ask your self when you are asked to be a guarantor is 'Am I ready to repay the loan?' If the answer is yes, go ahead, be a guarantor. If no, then you have to base your decision on a stronger reason than 'He is a close friend'. On a final note, if you do become a guarantor, you have to understand that there is no turning back. You cannot revoke your guarantee after the loan has being sanctioned. So, before you do sign the dotted line, check whether the contract tells you the amount you are guaranteeing, the situations in which you will have to repay the loan and if the amount to be borrowed can be increased without you being told. SOURCE: The Economic Times.

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