‘AWARENESS ON REVERSE MORTGAGE SCHEME STILL LOW'

The reverse mortgage scheme, even in its new avatar, has failed to attract senior citizens.

In an effort to popularise the scheme, National Housing Bank had tied up with Star Union Dai-ichi Life Insurance to provide a lifelong reverse mortgage annuity to senior citizens. However, due to a lack of awareness about the scheme and the reluctance on the part of the senior citizens to part with their houses, even the lure of higher monthly lifelong payments has failed to generate interest in the scheme.

Till now, only 11 people have subscribed to the scheme, said Mr Kamalji Sahay, Chief Executive Officer, Star Union Dai-ichi Life Insurance, at the sidelines of a seminar on reverse mortgage. Star Union Dai-ichi had tied up with Central Bank of India for Cent Swabhiman Plus to offer this product to the bank's customers.

The amount collected under the scheme is less than Rs 10 crore. However, it is still early to come to a conclusion as awareness about the scheme is still low, said a Central Bank of India official.

In the initial version, the monthly payouts under the reverse mortgage scheme were only for 20 years, which was considered to be inadequate in case the customer outlives 20 years. To address this, under the revised version, senior citizens could avail the annuity payments till death. The tie-up also ensured better returns to customers.

However, the monthly annuity payments are taxable, which are proving to be a deterrent, said Mr S. Sridhar, Chairman and Managing Director, Central Bank of India.

Mr Sridhar, who is also the NHB Chairman, said representations will be made to the Government to exclude the annuity payments from tax.

Credit book

Central Bank of India's credit book grew by 23 per cent in 2009-10, Mr Sridhar said. The bank is expecting a 25 per cent growth in credit and deposits this fiscal, he added.According to Mr Sridhar, the non-performing assets of the bank has gone up marginally. Central Bank of India, which had received Rs 450 crore of capital from the government recently, expects to receive the second tranche of around Rs 250 crore in the first half of the fiscal.

Source: http://www.thehindubusinessline.com/2010/04/10/stories/2010041050890600.htm