As talks about forming the 8th Central Pay Commission gain momentum, there’s still no official announcement, though many believe the government could make a decision soon.
Meanwhile, it’s important to look back and understand which employee benefits were removed by the 7th Pay Commission (7th CPC)—especially the interest-free loans that once helped lakhs of government employees.
What Were Interest-Free Advances?
Interest-free advances were loans provided by the Central Government to its employees for specific needs like buying a bicycle, medical treatment, festivals, transfers, and more.
These loans did not carry any interest and were a helpful benefit for employees.
This system continued until the 6th Pay Commission, but the 7th Pay Commission completely discontinued 12 such schemes.
These Are the 12 Interest-Free Advances That Were Ended:
| Name | Amount | Details |
|---|---|---|
| Cycle Advance | ₹4,500 | For employees with Grade Pay ≤ ₹2800; to be repaid in up to 30 installments |
| Advance for Warm Clothes | ₹4,500 | For Group C employees posted in hilly areas; repaid in 12 installments |
| Salary Advance on Transfer | 1 to 2 months’ salary | Given during transfers in public interest; repaid in 3 installments |
| Travel Allowance (TA) Advance | As needed | Adjusted after the trip is completed |
| TA Advance for Family of Deceased Employee | ¾ of estimated travel cost | Same rules as transfer or retirement |
| LTC Advance | Up to 90% of the fare | For eligible Central Government employees |
| Leave Salary Advance | Net pay for 30 days of leave | Adjusted from monthly salary |
| Medical Treatment Advance | ₹10,000 to ₹36,000 | For serious illnesses like cancer, TB, etc. |
| Festival Advance | ₹4,500 | For employees with Grade Pay ≤ ₹4800; repaid in 10 installments |
| Advance During Natural Calamities | ₹7,500 | For non-gazetted employees; repaid in 12 installments |
| Hindi Training Advance | ₹450 | For employees taking Hindi training via correspondence |
| Court Case Advance | ₹500 | To be repaid in up to 24 installments |
Why Were These Advances Removed?
Employee unions had demanded that the amounts for these loans be tripled, but the 7th Pay Commission called them unnecessary.
In its report, the commission said that due to higher salaries, these small loans were no longer useful.
Also, managing these loans was administratively expensive, so the commission suggested they should be stopped.
Which Advances Still Continue?
The 7th Pay Commission recommended that only two advances should continue, and both are interest-based:
House Building Advance (HBA) – For building or buying a house.
Personal Computer Advance – Can be taken once to buy a computer.
