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Mumbai, Nov. 2 Central Bank of India plans to launch the reverse mortgage scheme for the senior citizens. “We are ready to launch the product soon, but we are just waiting for the taxation issues to get resolved,” said Ms H. A. Daruwalla, its Chairperson and Managing Director.

Reverse mortgage is a stream of loan payments against the homeowner’s net equity stake in the property. In this scheme, the lending institution gives the borrower a fixed sum of money on monthly basis. The borrower can also choose to take a lump sum payment.

There are some tax issues relating to the reverse mortgage scheme. The banks therefore are awaiting some clarifications on the tax front, particularly whether the monthly payments made by the banks are taxable or not. The interest accrued on such loans is booked as income but banks want to pay tax on it only after the interest is earned from the property.

More Stories on : Mortgage | Public Sector Banks

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