The Hindu Business Line : Andhra Bank to foray into reverse mortgage

Hyderabad, March 20 Encouraged by the tax exemptions to reverse mortgage loans announced in the Union Budget 2008-09, Andhra Bank will be launching a reverse mortgage product in the first week of April.

“Our product was ready many months before the Bdget and we were waiting for clarification on the income tax aspects of reverse mortgage loans. As there is no confusion now, we will be launching the product probably on April 1,” Dr K. Ramakrishnan, Chairman and Managing Director, Andhra Bank told Business Line here.

The interest rates and other aspects of the product would be similar to housing loans. “The only difference, however, is that the interest amount would increase over a period of time,” he explained.

On the other expansion plans in the next fiscal year, the CMD said the focus would be on careful expansion of the retail portfolio and augmenting the fee-based income. “The retail is a very paying segment while the fee-based income is turning out to be major revenue for all the banks,” he observed.

As a key driver of fee-based income, the bank would continue to aggressively sell the products of Life Insurance Corporation of India till the bank’s insurance foray along with Bank of Baroda and UK-based Legal and General comes into operation.

“We have set up steering committees to look into various issues pertaining to insurance entity. Shortly, we will be applying to the Insurance Regulatory and Development Authority (IRDA) for necessary approval,” Dr Ramakrishnan said.

The insurance entity may be operation by the end of 2008 or early part of 2009, he added.

The Hyderabad-based bank would open over 80 branches in 2008-09 out which 50 would be in Andhra Pradesh. “To support the expansion, we would be recruiting about 500 next year,” he said.

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