ICICI Bank and Bank of Baroda are among the half a dozen private and public lenders planning to launch reverse mortgage products that will enable senior citizens owning a house to earn regular income.
Punjab National Bank is the only banking entity so far to have launched a reverse mortgage scheme, the final guidelines for which were issued on May 31.
However, a host of banks like ICICI Bank, BoB, Oriental Bank of Commerce, Corporation Bank and Allahabad Bank have expressed intention to enter this new business of lending to senior citizens by monetising house owned by them as an asset.
"This is a new product concept and the bank is working on details. It is like insurance product and need some expertise. We are currently studying the market scenario," Oriental Bank of Commerce Executive Director Allen CA Pereira told.
BoB, the country's fourth-biggest public lender, is also planning to launch its product within the next three months. Allahabad Bank has secured the approval of its board to come out with a reverse mortgage product and the bank is working on launching the product, bank officials said.
Besides PNB, Dewan Housing Finance has also launched this scheme, which is aimed at assuring the borrower a steady income by mortgaging the self-occupied property.
Dewan Housing and PNB had introduced these scheme under the names Saksham and PNB Baghban even before final guidelines on reverse mortgage were announced by National Housing Bank, the nodal agency for mortgage finance.
In reverse mortgage, a senior citizen who owns a house can earn a monthly income by mortgaging the house. The person, however, can stay in the house throughout his lifetime and does not have to repay or serve the loan.