Loan applications in Octal HR can be submitted by employees through self-service or created directly by HR on an employee's behalf. Each application runs a repayment-capacity check, and once approved the system generates an EMI schedule and routes the loan through approval before disbursement.
Loan Lifecycle
Every loan moves through the following statuses from application to closure:
A rejected application moves to Rejected if the approver rejects it. The employee can see the rejection reason and re-apply if appropriate.
Employee Self-Service Application
Employees can apply for loans from the self-service portal. The form captures the loan type, amount, tenure, repayment mode, and purpose.
In the self-service portal: Loans → Apply for a Loan.
Choose a loan type — personal, medical, education, housing, vehicle, emergency, or other.
The EMI calculator shows the monthly deduction in real time as the employee enters the amount, tenure, and repayment mode.
Brief description of the purpose, plus any supporting notes for the approver.
Status changes to Pending Approval. A notification is sent to the approving manager immediately.
HR Creating a Loan on Employee's Behalf
HR can create loan applications directly for any employee — useful when the employee cannot use self-service or for migrating existing loan records from a previous system.
EMI Preview
Before submitting, employees and HR can preview the full repayment schedule. Example for a PKR 120,000 personal loan at zero interest over 12 months:
Loan Summary Preview
Repayment Capacity Check
When the amount is entered, the system checks the employee's total loan EMI deductions against their net salary. If the combined deductions would exceed the configured limit (default 50% of net salary), the application is flagged as over the capacity threshold.
Disbursement
Once a loan is approved, HR disburses it by recording the disbursement date. Disbursement is by bank transfer to the employee. When the loan is disbursed, its status moves to Active, the repayment schedule is generated, and the payroll deduction is registered automatically.
EMI deductions are triggered automatically by payroll. When payroll is run for a month, the system checks every active loan, identifies the EMI due for that month, and adds it as a deduction line item on the payslip. No manual action is needed after disbursement.
Modifying an Active Loan
Changes to active loans (outstanding balance corrections, EMI amount changes, tenure extensions) require HR Admin or Finance Manager access. Each modification is logged in the loan's audit trail.
| Modification | How to Do It | Effect |
|---|---|---|
| Change repayment mode | Loans → [Loan] → Change Mode (EMI / bullet / manual) | Pending instalments are regenerated for the new mode and the payroll deduction is re-registered |
| Record a manual payment | Loans → [Loan] → Record Payment → Enter Amount | Outstanding balance reduced; remaining schedule balances recalculated |
| Waive an instalment | Loans → [Loan] → Schedule → Waive [Instalment] | Instalment marked Waived and its amount removed from the outstanding balance |
When the outstanding balance reaches zero — through payroll deductions, manual payments, or waivers — the loan is automatically marked as Settled and its payroll deduction is removed.