Rules 15-17 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Three rules govern what the Employees' State Insurance Corporation may do with the money and assets in its hands. Rule 15 covers investment, rule 16 caps spending on health, welfare and rehabilitation, and rule 17 covers property, contracts and loans.
The Corporation invests the ESI Fund under Central Government guidelines, and an investment change likely to cause a loss needs prior Central Government approval. It may spend up to Rs 1,000 crore a year (or as the Central Government specifies) on health and welfare measures, annual medical examination for insured persons aged forty and above at its own hospitals or dispensaries, and rehabilitation. The Director General can dispose of movable property up to Rs 1 crore per case; contracts over Rs 25 crore need Standing Committee sanction; and loans need Central Government approval.
Rule 15: investment of the ESI Fund
These rules implement sections 25 to 27 of the Code (see our article on sections 25, 26 and 27).
| Sub-rule | What it says |
|---|---|
| 15(1) | The Corporation invests the ESI Fund vested in it in accordance with guidelines issued by the Central Government |
| 15(2) | It may open as many accounts as it considers necessary or as the scheme specifies |
| 15(3) | Expenses of, and loss from, an investment are charged to the Fund; profit from sale of an investment accrues to the Fund |
| 15(4) | An investment may be varied, transposed or realised; if likely to cause a loss, prior approval of the Central Government is needed. The Explanation says approval is not needed merely because a security's maturity value is less than its purchase price |
| 15(5) | The Central Government may at any time direct vacation, in part or whole, or prohibit investment in any security or class of securities or any land or building |
| 15(6) | Dividends, interest and other sums are paid or credited to the Fund account as soon as possible after receipt |
For employers the point is ring-fencing: contributions you pay are Fund money, invested under Government supervision, and profits and losses belong to the Fund. If you need help understanding your contribution obligations, see our ESI and PF registration service.
Rule 16: limits for defraying expenditure
Rule 16 lets the Corporation spend from the ESI Fund on three purposes: promotion of measures for the health and welfare of insured persons, annual medical examination for insured persons aged forty years and above through the Corporation's own hospitals or dispensaries only, and rehabilitation and re-employment of insured persons who have been disabled or injured. The limit is rupees one thousand crore per year, "or as may be specified by the Central Government from time to time".
Two features stand out. The medical examination benefit is tied to age forty and above, and it is given only through the Corporation's own facilities. The limit is a ceiling on spending for these purposes; the rule does not say the amount must be spent.
Rule 17: property, contracts and loans
Property (rule 17(1) and (2))
- The Director General may, for the purposes of the Code, acquire movable or immovable property on behalf of the Corporation, subject to the Corporation's conditions.
- Standing Committee sanction is required to exchange immovable property, to take property on lease for a term exceeding thirty-six months, or to accept a gift or bequest burdened with an obligation.
- The Director General may sell or exchange movable property whose value does not exceed rupees one crore in each case, or grant a lease of immovable property for a term not exceeding twelve months.
- Anything more needs Standing Committee sanction, which may authorise lease, sale or disposal of movable or immovable property.
Contracts (rule 17(3))
| Point | Rule |
|---|---|
| Power | The Corporation may make and perform all contracts it considers necessary or expedient to carry out the Code |
| Who signs | The Director General, or a member or officer the Corporation authorises on stated conditions |
| Standing Committee sanction | Needed for any contract involving expenditure exceeding rupees twenty-five crore |
| Binding form | Entered into in a manner that would bind the person if it were made on his own behalf |
| Seal | The common or official seal is affixed to every contract for amounts exceeding rupees five lakh |
Loans (rule 17(4))
- The Corporation may raise loans for the purposes of the Code, on a resolution of the Standing Committee and with prior approval of the Central Government.
- Purposes include acquiring land or raising buildings, repaying a loan raised under the rule, or any other purpose the Central Government approves.
- Loans are obtained from the Central Government on the rate of interest and repayment terms it specifies, or, with its approval, from banks specified in the Rules. The gazette text refers to banks "specified in rule 30" in one clause and "rule 31" in another, so read the current Rules for the list of banks.
- With Central Government approval, the Corporation may grant mortgages of its property to secure repayment with interest.
- Interest and repayment are made as agreed, and the Corporation may apply sums towards early repayment of principal.
- No expenditure out of a loan is charged to capital without the previous sanction of the Central Government.
- The Corporation must submit to the Central Government an annual statement by 30 April each year showing loans raised and repayments made during the preceding year.
Who can decide what
| Decision | Who decides |
|---|---|
| Invest the ESI Fund | Corporation, under Central Government guidelines |
| Vary an investment likely to cause a loss | Corporation, with prior Central Government approval |
| Sell movable property up to Rs 1 crore | Director General |
| Lease immovable property over 36 months | Director General with Standing Committee sanction |
| Contract above Rs 25 crore | Standing Committee sanction required |
| Raise a loan | Standing Committee resolution and Central Government approval |
A worked example
The Corporation's investment in a security is due for early sale, which would realise less than the price paid and is therefore likely to result in a loss. Under rule 15(4), the prior approval of the Central Government is required. If the same security simply matures at less than its purchase price, rule 15(4)'s Explanation says no approval is needed merely on that ground. Separately, a proposed contract of Rs 30 crore for building works needs Standing Committee sanction under rule 17(3)(b), and the seal must be affixed because the amount exceeds Rs 5 lakh. (Illustrative.)
Need help with ESI compliance?
These rules are the Corporation's own housekeeping, but they protect the Fund that your contributions feed. Our ESI and PF registration practice can help you with registration, contributions and claims so that your side of the Fund is in order.
Key takeaways
- The ESI Fund is invested under Central Government guidelines; profit and loss belong to the Fund.
- A variation likely to cause a loss needs prior Central Government approval.
- Health, welfare, annual check-up (age 40 and above) and rehabilitation spend is capped at Rs 1,000 crore a year or as specified.
- Director General: movable property up to Rs 1 crore; Standing Committee: contracts above Rs 25 crore.
- Loans need Central Government approval, with an annual statement by 30 April.
Read next
- Sections 25, 26 and 27: ESI Fund, expenditure and holding of property
- Rule 14: Director General and Financial Commissioner
- Rule 18: Insurance of employees
- ESI calculation and applicability
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.