The Hindu Business Line : Children reverse mortgage plans of parents

Hyderabad, March 24 Retired life appeared beautiful for Mr R. Venkataiah when he was sanctioned Rs 15 lakh reverse mortgage loan by a bank. But on the day of finalising the deal, he was forced to withdraw his application. Can you guess the reason? Stringent opposition from his sons.

Albeit the recent Budget had made income from reverse mortgage non-taxable, children are, in most cases, playing spoilsport in their parents’ plans for reverse mortgage loans, according to sources.

“The reverse mortgage loans are yet to pick up and resistance from sons/daughters is definitely deterring the elderly parents from availing themselves of the loans. We had some cases where the applicants withdrew after sanction of the loan citing their sons’ resistance as reason,” Mr Chandra Sekharam, Assistant General Manager, State Bank of India, told Business Line.

With an advertising campaign on hoardings in many places, the Hyderabad region of SBI had received 65 applications so far. While the bank has sanctioned five loans, rest are under processing.

Worrying factor

A worrying factor for the banks is the big influence being wielded by children in the decision making by their parents opting for such loans.

“These loans have not picked up in many places of the country due to lack of enthusiasm in legal heirs of the property. But we expect this to pick up with increasing nuclear families over a period of time,” a senior official of LIC Housing Finance said from Bangalore.

Dr K. Ramakrishnan, Chairman and Managing Director, Andhra Bank, said the reasons for the slow pace of the product should be fathomed in the cultural background of our society.

“Unlike in the US, the elderly in India want to bequeath some property to their children. The children too will say that they can take care of their patents and there is no need for reverse mortgage,” he said.

However, some banks such as Union Bank of India and Andhra Bank are optimistic and have lined up product launches.

“We predict some action on this front in the days to come and are launching the product soon,” said Mr M.V. Nair, Chairman and Managing Director of Union Bank of India.

More Stories on : Mortgage | Credit Market

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page