NHB in talks with insurers to restructure reverse mortgage

MUMBAI: National Housing Bank (NHB) is in talks with leading insurance companies, including Life Insurance Corporation of India (LIC) to restructure the reverse mortgage scheme for senior citizens, a top banker said.

As per the current guidelines, a customer who mortgages his property to avail a reverse mortgage loan, will receive the monthly instalments for a period of twenty years after which the scheme will cease to exist.

"We are in talks with many insurance players and expect to come with this (the restructured scheme) in the next few months. This would enable senior citizens to avail the facility till their death," NHB's Chairman and Managing Director, S Sridhar told reporters here today.

Under the reverse mortgage scheme, senior citizens can avail loans against their properties. The customer need not pay back the amount during his life time. After his/her death, the legal heir can either surrender the property to the bank or repay the loan.

Though reverse mortgage is popular in western countries, the scheme has not been successful in the Indian market. Even major banks, including Punjab National Bank and Union Bank of India have evoked only a lukewarm response from their customers.

This can be gauged from the fact that 20 home lenders together have disbursed only around a mere Rs 550-crore worth loans to about 2,000 customers since the scheme was launched for the first time in the country last year, Sridhar said.

More number of customers are showing interest in the scheme after the government made the income received under the reverse mortgage scheme tax free.