Standing instruction is an order to a person or bank or an organization for making payment on behalf another person. In the payroll perspective, standing instructions comes as an order to the banker for paying the bills on behalf of the employee. In simple words, standing instruction or order means authorizing a person to pay some amount on behalf of somebody.
This facility makes repaying the loan / advance or any payment simple. Through a written declaration, your bank / financial organization is instructed to withdraw the sum of your EMI every month, from your account and automatically deposit it in the HFIs’ EMI account.
This will save everyone time and effort as the process is automatic. Usually standing instructions can be issued for
- Salary payments for employee on behalf of employer
- Payment of bills on behalf of employee
- Repayment of loans / advances etc.,
- Payment of insurance premium
- Transfer of funds between the bank accounts
Standing instructions issued by Employer:
Employer can issue a standing instruction to the banks / financial institution for making the salary disbursements and other amount disbursements to the employees.
Standing instructions issued by employee:
Employee may issue a standing instruction to the banks / financial institutions for paying the recurring bills like, Electricity bills, telephone bills, premium payments, EMI’s for repayment of loans etc., to the respective organizations.
Loans that can be linked to Salary and their conditions:
A loan linked to employee salary need not be necessarily towards personal loan. But in most of the cases, personal loans granted by banks are linked to the employee’s salary. It depends on every individual banks as some banks only give personal loans linked to salary but some banks grant the same loan for buying car, house etc.
Banks and private financial organizations are vying at their highest pace by offering the best, cheapest and most convenient financing option to the employees. A personal loan is the most preferred option by salaried people to meet any unforeseen contingencies. Some banks allow the employees to club their spouse income and lend more money.
Eligibility criteria:
This again depends on banker as to what is the minimum salary an employee should possess to have a loan linked with the salary. Some banks may restrict that employee must have a minimum take home pay as Rs.10,000/- and must have completed 2 years of service in any organization. The eligibility criteria vary from bank to bank.
Banks that offer paying the utility bills of employees like Telephone bills & insurance premiums etc. :
| ICICI Bank | Citi Bank | Axis Bank | Corporation Bank |
| Indian Bank | ING Vysya Bank | Bank of India | HDFC Bank |
| HSBC Bank | Central Bank of India | Standard Chartered Bank | Union Bank of India |
| Syndicate Bank | Dena Bank | Canara Bank | IDBI Bank |
| State Bank of India |
Salary Saving Scheme:
This is one of the saving schemes where employer deducts the premium from employee’s salary and remit to the insurance company. In this kind of saving schemes, premium has to be remitted by only employer or an LIC Agent.
Salary saving scheme policies have been offered by LIC, Reliance Life Insurance, HDFC, Max New york life, Birla Sun life Insurance, ING Life insurance etc.,.
Benefits of issuing a standing instruction for payment of insurance premiums:
The policy holder having accounts authorizes bank to deduct the premium from their account.
The premium will get deducted by the bank at a pre decided date and remitted to LIC.
- Time saving.
- Easy and automated way of remitting the premium.
- This one time instruction will remit the premium regularly on a pre decided date.
- No chance of missing the payment of any premium.
