Reverse mortgage scheme for senior citizens takes shape

Launching an exclusive product for the senior citizens, banks here are promoting the reverse mortgage loan scheme for their benefit. While the Punjab National Bank (PNB) introduced this scheme in the market as 'PNB Baagbaan' on April 13, the number of enquiries has increased tremendously over this time period. Toeing the same line, the State Bank of India (SBI) has also geared up by launching 'SBI Reverse Mortgage Loan' on October 12. Where PNB is charging an interest rate of 10% per annum, SBI will be disbursing the loan at a rate of 10.75% per annum. Under this scheme senior citizens can avail minimum of Rs 3 lakh upto Rs 1 crore against the house for at least 20 years. A senior official of PNB said , "The Union Budget proposals of 2007-08 included the introduction of 'reverse mortgages' in Indian Markets. This novel product will enable a senior citizen to avail a monthly stream of income against the mortgage of his house. The main objective of the loan is to generate income, supplement the pension or other income for day-to-day requirements." The tenure of the loan is about 15 to 20 years for the 60-70 age group and 10 to 15 years for individuals aged above 70 years. In case of joint account, the minimum age of the spouse for availing the loan under these two categories shall be 58 and 68 respectively.