Organizations often offer employees the option to get a loan from the organization for their personal needs. On the Keka HR Portal, you can define loan policies and categories that determine how the various loan options work, how the employee can apply for a loan and how the approval and repayment work. 

Here, we will look at how you can define the various loan categories and loan policies. 

Configuring loan categories

You have the option to define various loan categories that can help you define the different types of loans that you can offer to employees. Let us look at how you can define various loan categories. 

To begin configuring loan categories, Go to Payroll (1) and select the Loans tab (2). Select the Policies & Settings tab (3) and then select Loan Categories (4).

Here, you can find the various loan categories in this window. To add a new loan category, click Add Loan Category. 

In the Add Loan Category window, enter the Category Name, select a Category Icon and colour, and add a Description.

You can select the option Show Loan Description While Applying Loan if you want the loan description to be visible to the employees when they are applying for a loan. 

You can also select if the loan is eligible to be considered for taxation under the interest-free/concessional rate prerequisite. This means that the difference in interest charged by the organization and the interest that is charged by the State Bank of India (SBI) for a similar loan will be considered a taxable component. 

If you select the Consider for taxability under interest free /concessional loan prerequisite checkbox, you will have options to enter the rate of interest that SBI charges for a similar loan and also the year from which the interest rates should be applicable. 

Once you've added all the details, click Save.

This will add the new loan category to your list. 

To delete a loan category that is on the list, click on the three dots corresponding to that category and choose Delete from the drop-down. 

In the confirmation window, click Confirm to delete the loan category. 

To edit a particular loan category, click on the three dots and from the drop-down, select Update.

In the Update Loan Category window, make the changes to the loan category and click Update.

Add all the loan categories you want on this page. You can then proceed to create loan policies. 

Configure loan policies

Loan policies determine how the various loans work. This feature can help you determine which employees are eligible for each type of loan, what loan categories are to be included in each policy and also keep track of important aspects like the number of EMIs permitted, the interest rates and more. 

Creating a loan policy

Let us now see how you can create and manage loan policies for the various pay groups in the organization's Keka Portal. 

To set up loan policies, navigate to Payroll (1) from the left pane and select the Loans (2) tab. Select the Policies & Settings (3) tab and then the Loan Policies (4) tab. 

Here you can see the various loan policies that have been configured in the system. Click on +Add Loan Policy to add a new policy. 

In the Configure Loan Policy window that opens up, enter a Policy Name and Description.

Up next, you have to define the eligibility criteria for the loan. You can choose who are eligible for the loan and also when the employee becomes eligible for the loan. 

First option defines when the employee becomes eligible for the loan. Select the Employees are Eligible for Loans After checkbox to reveal 2 options. You can choose Probation Period if you want the employees to be automatically eligible to apply for the loan when they complete their probation. You can also enter the number of days in the second option such that employees become eligible to apply for the loan after a defined number of days from their joining date. 

You can also set further eligibility criteria. By selecting the Employees are Eligible If Annual Salary is in the Range of checkbox and entering a salary range, you can ensure that only employees who have an annual salary of a particular range are eligible for the loan.  

You can also choose if employees in the notice period are eligible for the loan. 

The next important aspect to configure would be the approval chain. If you want the loan requests to be approved, you can define who should approve these loans and also define the number of levels of approval required. 

Click on the search bar to reveal the list of roles that are defined in the system. Select a role from the drop-down to assign as the approver. Once you have chosen the approver, you can choose to configure auto approval 

Click on + Add New Level to add another level of approval. 

 When you have multiple levels of approval, you can also define what happens when the approver does not take an action in a fixed number of days. Select the Auto-approve and skip this level if no action taken in -- days and enter the required number of days. This will auto approve the request if it is not approved in the specified number of days. 

There are 2 other options on this window to consider. Selecting the auto approve in case the selected role hasn't been assigned to any employee on the system, they haven't registered on Keka or they have been relieved from their role in the organization. 

The second option pauses email notifications to the approvers when a loan request is raised by any employee. They can view the requests on their daily email digest. 

Once you've made the necessary selections, click Save to create the new loan policy. 

On the Loan Policies page, you can see the different loan policies that are in effect in the organization. You can also add loan categories to each policy. This enables disbursement of particular loan categories according to some policies that have been set up. 

To add a loan category to a policy, select the loan policy that you want to edit and then select the Loan Categories tab. 

Here, you can add the various loan categories that you want to define within the loan policy. To add a new loan category, click + Add Loan Category. 

From the Add Category window, select the loan categories that you want to add to the loan policy from the list of categories that have been configured on the system. Click Add after you've made the selections to add the categories to the policy. 

Once you have added a category, you can set up specific rules for the loan category which determines the specifics of the loan such as the default interest rates, the number of EMIs and the limits to the loan amount. 

To set up the rules, on the Loan Categories tab in the selected loan policy, click Setup Rules.

In the Setup Rules window that opens, you can add the different details for the loan category that is governed by the selected loan policy. 

The first choice to make is the default interest rate for the loan. You can enter the desired interest rate for the loan and you can also choose if the interest rate is a Flat Rate or a Reducing Rate.

You can also define the maximum number of EMIs that can be allowed for this particular loan category. The next option is to determine when the EMIs should start from the disbursement rate. You can define the maximum number of months from this date before the EMI deduction begins. 

You can also define limits to the loan amount and set a maximum limit based on a percentage of the annual salary of the employee or a fixed value, whichever is lower. You can define the percentage and the monetary value after you've selected the checkbox which limits the loan amount. 

Finally, you can also determine if the employees need to add an attachment with their loan request to provide proof to support the claim. If you want employees to submit proof, select the Attachment is required when employee applies loan under this category checkbox. 

After you've selected the options and entered the details, click Save to update the rules. 

You can update or delete the rules you've configured for any loan category by clicking on the three dots corresponding to the loan category under Actions and selecting the required option from the drop-down.

Select Update Rules to edit the rules you've configured. Select Delete to delete the loan category from the loan policy. 

Creating a loan policy by cloning an existing policy

You can also create a new loan policy by cloning an existing loan policy and then editing the details of this policy to configure the new policy. To clone an existing policy, from the Loan Policies page, click on the three dots corresponding to it and from the drop-down, select Clone. 

This will open the Clone Loan Policy window where you can enter a name for the new policy, change the description and also determine which loan categories needs to be included in the new policy including the various configurations. 

Make the necessary changes and click Clone to create a new policy.

Editing a loan policy

To edit a particular loan policy that has been configured on the system, select the loan policy that you want to edit and click on the three dots next to it. Select Edit from the drop-down to edit the policy. 

In the Configure Loan Policy window that opens, make the necessary changes to the loan policy and click Update. 

Deleting a loan policy

To delete a chosen loan policy from the system, select the policy from the left pane and click on the three dots corresponding to the policy. Select Delete from the drop-down.

On the confirmation screen, select Confirm to delete the policy.

You cannot delete a loan policy which has employees assigned to it. Remove the employee assignments before you attempt to delete a loan policy. 

Viewing the employees assigned to a loan policy

To view the various employees that are assigned to any loan policy, select the loan policy from the left pane on the Loan Policies window. Go to the Employees tab on the policy to view the list of employees that has been assigned that particular policy. 

You can use the search bar on the page to search through the list and find the employee you want. 

And that's all about managing loan categories and loan policies. More questions? Talk to our product experts today!