REVERSE MORTGAGE IN INDIAN BANKS – A STUDY

Reverse mortgage an agreement by which a home owner borrows against the equity in his home and receives regular tax free payments from the lender. Here equity is the value of the property over and above any mortgage or other liabilities relating to it. Thus, reverse mortgage is a contract between a homeowner and a financier which enables the homeowner to receive a stream of income, especially in retirement, from the future realizable value of the home. With the growth of the ageing population, old age security has become one of the prime concerns for the Indian government. All the measures are good for people who are into their working life and thus can save for their retirement now. But one of the segments which have been left is the one who are in their retirement phase and who may not have enough cash to sustain their life. They are called senior citizens. These people may not have enough income or saving in cash but may have assets which may not be providing income. To overcome this problem, some of the public sector banks and one private housing finance company have already come up with their products and the reverse mortgage market in India started growing. The objective of this paper is to provide an overview of the reverse mortgage market in Indian Banks and how it is relevant for Indian market today.