The world population structure shows that population worldwide is ageing owing to exaggerated longevity of older folks and small birth rates in developed and most developing countries. Visit www.projectskart.com for more information. In Asian nation alone, statistics show that variety of older as a proportion of population can show a 107% growth, from 113 million in 2016 and 179 million by 2026 severally.
Need capital to start, grow and manage your business, we provide loans in the form of short term loans and long term loans, check your ability to get a loan by bank loan rating and credit score check. Get complete information about the Syndication & Funding right from Term Loans to Unsecured Loans and the Process.
Investor behavior in the stock market – Rational and Irrational perspectivesRohit Bedi
This research involves the study of buying and selling behavior of the Indian investor from both rational and irrational perspectives. The research involves collection of primary data through a questionnaire. The questionnaire has general questions related to investors’ preferences regarding their investment decisions and questions related to the influence groups which affect their investment behavior.
Accessing Capital, An Insight - RSM India publication (2011)RSM India
This publication by RSM India group, published in April 2011, is general in nature and endeavors to to analyse certain significant aspects of tapping capital.
Introduction to Venture Capital and Private Equityguest89b446
I was invited to speak at the HR College of Commerce in Mumbai today as part of their "Corporate Dialogue" lecture series. This deck introduces freshman and sophomore students in commerce, economics and finance to venture capital, private equity and entrepreneurship. It also presents a primer on career options in finance for college graduates in India.
Need to know more about private equity and hedge funds? Then you have come to the right place with this quick overview presentation. This is based on my book: "Figuring Out Wall Street". A part of a continuing series of on the financial services industry. We provide training, custom developed to your needs. Contact us to discuss your needs and get a quote.
I rarely have a conversation these days where the topic of financing doesn’t arise as a serious concern for my clients. When the economy is robust, and the
capital markets are frothy, financing a commercial real estate transaction is a relatively simple matter. However during today’s recessionary times, the
commercial capital markets are severely constrained. Not only is the supply of capital tight, but the demand may be near all time highs as well. Depending on which industry source you quote there is between $150 and $200 billion dollars of CMBS debt maturing in...
Need capital to start, grow and manage your business, we provide loans in the form of short term loans and long term loans, check your ability to get a loan by bank loan rating and credit score check. Get complete information about the Syndication & Funding right from Term Loans to Unsecured Loans and the Process.
Investor behavior in the stock market – Rational and Irrational perspectivesRohit Bedi
This research involves the study of buying and selling behavior of the Indian investor from both rational and irrational perspectives. The research involves collection of primary data through a questionnaire. The questionnaire has general questions related to investors’ preferences regarding their investment decisions and questions related to the influence groups which affect their investment behavior.
Accessing Capital, An Insight - RSM India publication (2011)RSM India
This publication by RSM India group, published in April 2011, is general in nature and endeavors to to analyse certain significant aspects of tapping capital.
Introduction to Venture Capital and Private Equityguest89b446
I was invited to speak at the HR College of Commerce in Mumbai today as part of their "Corporate Dialogue" lecture series. This deck introduces freshman and sophomore students in commerce, economics and finance to venture capital, private equity and entrepreneurship. It also presents a primer on career options in finance for college graduates in India.
Need to know more about private equity and hedge funds? Then you have come to the right place with this quick overview presentation. This is based on my book: "Figuring Out Wall Street". A part of a continuing series of on the financial services industry. We provide training, custom developed to your needs. Contact us to discuss your needs and get a quote.
I rarely have a conversation these days where the topic of financing doesn’t arise as a serious concern for my clients. When the economy is robust, and the
capital markets are frothy, financing a commercial real estate transaction is a relatively simple matter. However during today’s recessionary times, the
commercial capital markets are severely constrained. Not only is the supply of capital tight, but the demand may be near all time highs as well. Depending on which industry source you quote there is between $150 and $200 billion dollars of CMBS debt maturing in...
Please review my information package explaining how reverse mortgages can help mature adults lead a more productive quality of life. Using a grown credit line that grows over time with no impact to social security or personal income tax liability
9 Mortgage MarketsCHAPTER OBJECTIVESThe specific objectives of.docxblondellchancy
9 Mortgage Markets
CHAPTER OBJECTIVES
The specific objectives of this chapter are to:
· ▪ provide a background on mortgages,
· ▪ describe the common types of residential mortgages,
· ▪ explain the valuation and risk of mortgages,
· ▪ explain mortgage-backend securities, and
· ▪ explain how mortgage problems led to the 2008- 2009 credit crisis.
9-1 BACKGROUND ON MORTGAGES
A mortgage is a form of debt created to finance investment in real estate. The debt is secured by the property, so if the property owner does not meet the payment obligations, the creditor can seize the property. Financial institutions such as savings institutions and mortgage companies serve as intermediaries by originating mortgages. They consider mortgage applications and assess the creditworthiness of the applicants.
The mortgage represents the difference between the down payment and the value to be paid for the property. The mortgage contract specifies the mortgage rate, the maturity, and the collateral that is backing the loan. The originator charges an origination fee when providing a mortgage. In addition, if it uses its own funds to finance the property, it will earn profit from the difference between the mortgage rate that it charges and the rate that it paid to obtain the funds. Most mortgages have a maturity of 30 years, but 15-year maturities are also available.
9-1a How Mortgage Markets Facilitate the Flow of Funds
WEB
www.mbaa.org
News regarding the mortgage markets.
The means by which mortgage markets facilitate the flow of funds are illustrated in Exhibit 9.1. Financial intermediaries originate mortgages and finance purchases of homes. The financial intermediaries that originate mortgages obtain their funding from household deposits. They also obtain funds by selling some of the mortgages that they originate directly to institutional investors in the secondary market. These funds are then used to finance more purchases of homes, condominiums, and commercial property. Overall, mortgage markets allow households and corporations to increase their purchases of homes, condominiums, and commercial property and thereby finance economic growth.
Institutional Use of Mortgage Markets Mortgage companies, savings institutions, and commercial banks originate mortgages. Mortgage companies tend to sell their mortgages in the secondary market, although they may continue to process payments for the mortgages that they originated. Thus their income is generated from origination and processing fees, and not from financing the mortgages over a long-term period. Savings institutions and commercial banks commonly originate residential mortgages. Commercial banks also originate mortgages for corporations that purchase commercial property. Savings institutions and commercial banks typically use funds received from household deposits to provide mortgage financing. However, they also sell some of their mortgages in the secondary market.
Exhibit 9.1 How Mortgage Markets Facilitate t ...
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan. However, the word mortgage alone, in everyday usage, is most often used to mean mortgage loan.
A New Era for Home Buying - The Rise of Home Ownership InvestmentsMichael Micheletti
A home ownership investment is a new financial product category that addresses two huge consumer demands: It increases accessibility to home ownership and it allows homeowners to unlock a portion of their existing home equity without taking on more debt. Homeowners have traditionally financed their homes with various forms of debt. With debt, the homeowner pays interest and makes monthly payments. A home ownership investment is home financing based on partnership, and it completely changes the game. It is not debt. A home ownership investment provides cash financing to homeowners on behalf of investors seeking long-term price exposure to residential real estate. This naturally aligns the interests of the homeowner and the investor, as partners. Unlike mortgages and home equity loans, there are no interest charges or monthly payments. Instead, Unison’s investors earn a return by sharing in the change in value of the home, up or down, when the homeowner decides to sell – up to 30 years later. If the home value rises, the homeowner and the investor both profit. If the home value falls, both lose.
When we think about refreshment, the first thing that comes to our mind is coffee or tea. Most people prefer coffee and most prefer tea and these two drinks have become a part of a human being’s life.
Here we (I) have concentrated on coffee which is considered as a traditional drinks especially in south India. People here start their everyday life with a cup of coffee. Not only in south India but in all parts of the world people are so dependent and addicted to coffee that it acts as a daily schedule to every body every where. But this coffee is not grown in all parts of the world but is grown in very few places with right kind or weather, atmosphere and most important of all, the soil of that region.
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The sugar industry occupies a major portion in the (organization) industries of India. The sugar industries have rank second next to cotton and textile industries. The sugar industry started since 1830. China is the first producer of sugar in the world. It provides highest direct employment opportunities.
The sugar industry is one of the important Ago-based industry of the country India is the fourth major sugar production in the world. The first three is Russia, Brazil and Cuba. Sugar industry provides direct employment to nearly 3lakh persons this industry supports about 25 million agriculturists. It pay’s both to the central government and the state government about Rs.350 crores by way of different taxes. The capital employed in the industry is of the order of Rs.780 crores. There are about 414 mills producing sugar, which are spread all over the country.
When we think about refreshment, the first thing that comes to our mind is coffee or tea. Most people prefer coffee and most prefer tea and these two drinks have become a part of a human being’s life.
Here we (I) have concentrated on coffee which is considered as a traditional drinks especially in south India. People here start their everyday life with a cup of coffee. Not only in south India but in all parts of the world people are so dependent and addicted to coffee that it acts as a daily schedule to every body every where. But this coffee is not grown in all parts of the world but is grown in very few places with right kind or weather, atmosphere and most important of all, the soil of that region. It is usually grown in hill stations with adequate amount of rainfall and such places which are high above sea level. Therefore in India, Karnataka is such a place, especially South Karnataka which produces the highest amount of coffee in whole India. Most parts of Karnataka such as Chikmagalur district and many parts in Hassan District, and also Coorg.
A Study on Sugar Industry at Chamundeshwari SugarProjects Kart
The discovery of sugarcane from which sugar was produced had been known since thousands of years. It is thought to have originated in New Guinea, and was spread along routes to Southeast Asia and India. The process known for creation of sugar, by pressing out the juice and then boiling it into crystals, was developed in India around 500 BC.
Its cultivation was not introduced into Europe until the middle-ages, when it was brought to Spain by Arabs to thrive in a most favorable climate.
Study on Inventory Management at Reid & Taylor (India) LtdProjects Kart
Inventory is a list of goods and materials, or those goods and materials themselves, held available in stock by a business. Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting.
Study on Working Capital Management at PNBProjects Kart
The prime objective of any business is to maximize the value of the company and to maximize the wealth of its shareholders. Working capital management has its own role to play in attaining this goal. Working capital is the funds required for day to day working in a business concern. The working capital management involves deciding upon the amount and composition of current assets and how to finance those assets. There should be a proper trade off between risk and profitability in each decision relating to it. This project work has been undertaken to know the procedures involved in the working capital management in PUNJAB NATIONAL BANK. An attempt is made to study the factors contributing towards working capital and the sources on which the company is depending for funds. The research study was also conducted to derive working capital ratios, to know the performance and efficiency of working capital management and to know the kind of policy adopted in this part of the management. For analyzing the factors and conditions influencing working capital tables and graphs were drawn based on the study. pubjab national bank mba project, summer internship 2017, project reprot, punjab national bank pdf, risk, project report pdf, project report, customer satisfaction in punjab national bank
Study on Mutual Fund is the Better Investment PlanProjects Kart
Mutual funds have become a hot favorite of millions of people all over the world. The driving force of mutual fund is the ‘safety of the principal’ guaranteed, plus the added advantage of capital appreciation together with the income earned in the form of interest or dividend. People prefer Mutual Funds to bank deposits, life insurance and even bond because with a little money, they can get into the investment game. One can own string blue chips like ITC, TISCO, Reliance etc., through mutual funds. Thus, mutual funds act as a gateway to enter into big companies hitherto inaccessible to an ordinary investor with his small investment.
Study on Store Environment and Merchandising Mix at Big BazaarProjects Kart
Retailing consists of those business activities involved in the sale of goods and services to consumers for their personal, family, or household use. Retailing comprises of four elements customer orientation, coordinated effort, value-driven, and goal orientation. The word "Retail" originates from a French-Italian word. Retailer-someone who cuts off or sheds a small piece from something. Retailing is the set of activities that markets products or services to final consumers for their own personal or household use. It does this by organizing their availability on a relatively large scale and supplying them to customers on a relatively small scale. Retailer is a Person or Agent or Agency or Company or Organization who is instrumental in reaching the Goods or Merchandise or Services to the End User or Ultimate Consumer.
Initial Public Offers and Due DiligenceProjects Kart
This report, as the Title “Initial Public Offers and Due Diligence: The Role of a Investment Banker”, is an attempt to bring forth the importance of the process of Due Diligence and the significance of the vital role played by the Investment Banker in managing the issue of an Initial Public Offer (IPO).
When a Company issues an IPO, it means it is going public. The issue of an IPO introduces a great degree of transparency in a Company‟s operations. All the relevant and updated information pertaining to the company is laid down before the investors so that they may make an investment decision. Again, there are set procedures, rules, regulations and laws to be followed in laying down this information before the investors. A document called the Prospectus‟ must be prepared. The Prospectus captures all the necessary information that is to be made available to the investors. Apart from the Prospectus, there are various other company documents that need to be verified and summarized in order to present them before the investors.
Influence of ADR on Underlying Stock PricesProjects Kart
Globalization has opened the door for the investors to avail various investment avenues across the globe. American Depository Receipt (ADR) is one such opportunity to the investing community. The ADR is a proxy for the Indian shares to enable them to be traded in the American stock exchanges. Various studies conducted on Depository Receipts (DRs) have shown that the trading on the DR sin the foreign market has its influence in the home country’s stock in terms of price, volatility and volume. This interested me and this project is concerned about studying “Whether the price fluctuations of ADR affect the corresponding Indian share prices?”
After the liberalization of the economy in 1991, the corporatist started sourcing their capital from both domestic and foreign markets. The Indian shares cannot be directly listed in the American stock exchanges. ADRs have been very helpful in this purpose. So a custodian bank receives the shares as deposit and issues receipt to the market. These receipts are issued in appropriate ratio to the shares deposited with the depository. The market players in the stock exchanges trade these receipts.
Impact of ERP on Organizational Functions in Retail SectorProjects Kart
The business environment has changed more in the last five years than it did in the previous five decades. Winning in today’s business climate requires more than just providing high-quality, low-cost products to customers, when and how the customers want them. The ability to respond to new customer needs and seize market opportunities as they arise, without compromising on the profitability of the firm is critical for the success of any organization. Competitive pressures frequently force manufacturers to decrease prices in spite of the fact that their internal costs continue to rise. Enterprises are continuously striving to improve themselves in the areas of quality, time to market, customer satisfaction, performance and profitability. Making informed business decisions in this manner would enable organizations to accomplish their business growth and at the same time enable them to utilize the information to competitive advantage. To make it possible for the companies to execute this vision, there is a need for an infrastructure that will provide information across all functions and locations within the organization and this is the Enterprise Resource Planning (ERP) solution available in the market today.
The Impact of Creativity and Wow Factor in AdvertisingProjects Kart
The approach used in this report is a case study approach. It essentially deals with two aspects; creativity and WOW factor. These two terms have been defined and the impact they have in advertising has been studied. The objectives of doing such a study were to understand creativity, to define it and to find factors that elicit a WOW response from viewers.
Impact of Advertisements on Investors at HDFC Standard Life InsuranceProjects Kart
This project is managing study on “Impact of advertisement on Investors – A case study in HDFC Standard Life Insurance” The scope of study is regarding the advertisements and therefore the presence of HDFC SLIC with relation to in door advertisements and their advertisements & their effectiveness & out door advertisements, however the folks wish to watch them. to understand the notice within the public like better to watch the ads and medium.
Impact of Advertising on Customers in Tata MotorsProjects Kart
The consumer durable market in India has been very competitive in the recent years, with opening up of market for international players due to liberalization; the domestic players are facing a tough competition. So it‟s time for domestic companies to frame new strategies for their production and marketing activities. An evaluation of the effectiveness of the past activities of a company will enable the company in framing these new strategies. Such an effort has been made through this market research to know the http://www.projectskart.com/ on Customers in TATA MOTORS (A case study in AUTO MATRIX, HASSAN).
Recruitment and Selection at Aviva Life InsuranceProjects Kart
The MBA project titled “RECRUITMENT AND SELECTION” Undertaken in AVIVA life insurance.
AVIVA is a UK based insurance group. It has a long history dating back to 1834 and has a joint venture with DABUR groups. Aviva holds a 26 per cent stake in the joint venture and the Dabur group holds the balance 74 per cent share.
It is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world.
The project report is about recruitment and selection process that‟s an important part of any organization. Which is considered as a necessary asset of a company? In fact, recruitment and selection gives a home ground to the organization acumen that is needed for proper functioning of the organization.
Financial Analysis on Recession Period at M&M TractorsProjects Kart
Financial ANalysis (also stated as financial plan analysis or accounting analysis) refers to an assessment of the viability, stability and profitable of a business, sub-business or project. Visit www.projectskart.com for more information. It is performed by professionals World Health Organization prepare reports exploitation ratios that create use of data taken from monetary statements and different reports. These reports area unit typically given to prime management mutually of their bases in creating business selections.
Effective Supply Chain Management as a Strategic AdvantageProjects Kart
TSS was established in 1913 and since then it has been in Sirsi. The products have got their own brand image and also customers. Based on the service provided by TSS to its customers we can know how the organization considers its customers and its products to the customers. A study Effective supply chain management as a strategic advantage at TSS is undertaken for assessing the supply towards the customers and to understand the expectations of the customers towards arecanut and its products which will in turn help to take appropriate action by the management for removing the loop holes.
Brand Awareness of Spencer's and Comparative Analysis with Big BazaarProjects Kart
By 2004 the retail industry was growing rapidly in India, and Spencer's Retail decided to pursue an aggressive expansion strategy. The company had the customers, the products, and the employees to make it happen. It just needed an IT infrastructure that could support rapid growth. Visit http://www.projectskart.com/p/contact-us.html for more information. Current servers were at capacity, and the company needed to upgrade before adding new stores. Amit Mukerjee, Group CIO of the RPG Group, describes the challenge as part of the learning curve for retail development in India. ―Retailing is a new business in this country. As the business matures, the process matures, and IT systems must evolve accordingly. The company also needed an enterprise resource planning (ERP) solution to handle critical processes such as supply-chain management. It decided to implement mySAP ERP, now called SAP ERP, and realized the solution needed to run on high-performance servers. Spencer's Retail evaluated several possibilities, including servers from HP, IBM, and Sun Microsystems. It decided to build its IT infrastructure on Sun systems for several reasons. Sun SPARC Enterprise Servers had the performance and scalability needed to sustain its business, and they delivered higher performance at less cost. Sun's knowledge of the retail space in India, as well as its long history with RGP Enterprises, were also deciding factors.
A Study on Employee Job Satisfaction at KMFProjects Kart
India is called the “country of villages” where it covers nearly 70% of its total area. In this relation we can say that Indian economy is base on rural activities and their development. Therefore we have to give prime importance to the rural activities. Visit http://www.projectskart.com/p/contact-us.html for more information.
RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
Grote partijen zijn al een tijdje onderweg met retail media. Ondertussen worden in dit domein ook de kansen zichtbaar voor andere spelers in de markt. Maar met die kansen ontstaan ook vragen: Zelf retail media worden of erop adverteren? In welke fase van de funnel past het en hoe integreer je het in een mediaplan? Wat is nu precies het verschil met marketplaces en Programmatic ads? In dit half uur beslechten we de dilemma's en krijg je antwoorden op wanneer het voor jou tijd is om de volgende stap te zetten.
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Attending a job Interview for B1 and B2 Englsih learnersErika906060
It is a sample of an interview for a business english class for pre-intermediate and intermediate english students with emphasis on the speking ability.
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
"𝑩𝑬𝑮𝑼𝑵 𝑾𝑰𝑻𝑯 𝑻𝑱 𝑰𝑺 𝑯𝑨𝑳𝑭 𝑫𝑶𝑵𝑬"
𝐓𝐉 𝐂𝐨𝐦𝐬 (𝐓𝐉 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬) is a professional event agency that includes experts in the event-organizing market in Vietnam, Korea, and ASEAN countries. We provide unlimited types of events from Music concerts, Fan meetings, and Culture festivals to Corporate events, Internal company events, Golf tournaments, MICE events, and Exhibitions.
𝐓𝐉 𝐂𝐨𝐦𝐬 provides unlimited package services including such as Event organizing, Event planning, Event production, Manpower, PR marketing, Design 2D/3D, VIP protocols, Interpreter agency, etc.
Sports events - Golf competitions/billiards competitions/company sports events: dynamic and challenging
⭐ 𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐝 𝐩𝐫𝐨𝐣𝐞𝐜𝐭𝐬:
➢ 2024 BAEKHYUN [Lonsdaleite] IN HO CHI MINH
➢ SUPER JUNIOR-L.S.S. THE SHOW : Th3ee Guys in HO CHI MINH
➢FreenBecky 1st Fan Meeting in Vietnam
➢CHILDREN ART EXHIBITION 2024: BEYOND BARRIERS
➢ WOW K-Music Festival 2023
➢ Winner [CROSS] Tour in HCM
➢ Super Show 9 in HCM with Super Junior
➢ HCMC - Gyeongsangbuk-do Culture and Tourism Festival
➢ Korean Vietnam Partnership - Fair with LG
➢ Korean President visits Samsung Electronics R&D Center
➢ Vietnam Food Expo with Lotte Wellfood
"𝐄𝐯𝐞𝐫𝐲 𝐞𝐯𝐞𝐧𝐭 𝐢𝐬 𝐚 𝐬𝐭𝐨𝐫𝐲, 𝐚 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐣𝐨𝐮𝐫𝐧𝐞𝐲. 𝐖𝐞 𝐚𝐥𝐰𝐚𝐲𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐫𝐭𝐥𝐲 𝐲𝐨𝐮 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐨𝐮𝐫 𝐬𝐭𝐨𝐫𝐢𝐞𝐬."
Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
HR recruiter services offer top talents to companies according to their specific needs. They handle all recruitment tasks from job posting to onboarding and help companies concentrate on their business growth. With their expertise and years of experience, they streamline the hiring process and save time and resources for the company.
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
1. Www.projectskart.com
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Introduction
1.1 Introduction to Reverse Mortgage
The world population structure shows that population worldwide is ageing due to
increased longevity of older people and decreased birth rates in developed and most
developing countries.
In India alone, statistics show that number of elderly as a proportion of population will
show a 107% growth, from 113 million in 2016 and 179 million by 2026 respectively.
Combined with growing health care costs, changes in the joint-family system and
increased longevity- the average life expectancy of men is 75, and that of women is 79, at
age 60- there is a pressing need for tangible alternative to the pension schemes, so that
aged people can lived in a lifestyle they are accustomed to.
Currently, the mandated coverage in govt and private pension schemes are available to
around 11% of population. The rest of the population have to plan their financial security
independently without recourse to any of the existing govt pension plans.
Again, many of the senior citizens are living on fixed incomes, fixed pensions, or on the
proceeds of investments that do not meet their financial needs. Some require additional
sources of income to cover day to day expenses. This will not be taken care of by the
pension schemes exist currently in the market.
To address this issue of old-age financial solvency, it is necessary to first address the
various instruments of saving that are available in the financial sector. Asset ownership
structure in India suggests that housing wealth constitutes major portion of the non-
pension wealth of the elderly. The problem that many house owners face is on how to tap
into this housing wealth for consumption without selling the house and moving. The
reverse mortgage is one such instrument that allows a house owner to borrow against the
equity accumulated in the home without having to pay back the proceeds of such loan
during the lifetime of the reverse mortgage.
Old age comes with its own share of problems. As a person grows older, and his regular
source of income dries up, his dependency on others can increase significantly. With
2. health care expenses on the rise and little social security, living the golden years
respectfully can be quite a challenge for senior citizens. In such a scenario, a regular
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income stream that can help them meet their financial needs and maintain their current
living standards becomes important.
One typical feature with most senior citizens is that their residential property accounts for
a significant portion of their total asset pie. And, given its illiquid nature, property fails to
aid senior citizens on the liquidity front.
In the Union Budget 2007-08, a proposal to introduce 'Reverse Mortgages' was put forth.
In a regular mortgage, a borrower mortgages his new/existing house with the lender in
return for the loan amount (which in turn he uses to finance the property); the same is
charged at a particular interest rate and runs over a predetermined tenure. The borrower
then has to repay the loan amount in the form of EMIs (equated monthly instalments),
which comprise of both principal and interest amounts. The property is utilized as a
security to cover the risk of default on the borrower's part.
In the reverse mortgage, senior citizens (borrowers), who own a house property, but do
not have regular income, can mortgage the same with the lender (a scheduled bank or a
housing finance company-HFC). In return, the lender makes periodic payment to the
borrowers during their lifetime. In spite of mortgaging the house property, the borrower
can continue to stay in it during his entire life span and continue to receive regular flows
of income from the lender as well. Also, since the borrower doesn't have to service the
loan, he need not bother about repaying the 'borrowed amount' to the lender.
1.2 Basis for Reverse Mortgage
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Housing wealth is one of the non monetary wealth of senior citizens in India. Given its
essential illiquid nature, it is not possible for elderly house owners to tap into home equity
for financing day to day activity/expenses without either disposing off the property.
Reverse mortgages were initially introduced in the USA, as a means of accessing equity
locked up in residence, especially after the owner has retired.
1.3 Reverse mortgage- A tool to Financial Freedom
A reverse mortgage is described as an annuity payment to the homeowner for the length
of time that he/she remains in the house. No repayments have to be made on the loan as
long as the homeowner is alive and still living in the house affected by the reverse
mortgage, or till the spouse of the homeowner is alive and still living in the said property.
This is better than conventional types of mortgage where the homeowner has to either
move out or sell her property, or has to undertake to make regular annuity payments on a
loan.
A lot of elderly homeowners also want to “age in place” at a known surrounding and
donor want to dispose-off the house property for various reasons both economic and
psychological. For this category of people, a reverse mortgage is a potent tools to encash
their housing equity to meet day to day living expenses.
Reverse mortgage, as a product is currently present in USA, part of Europe and Australia,
and New Zealand. The US experience has been mixed. While the market was stagnant for
nearly half a decade, there is a huge growth both in terms of products sold in terms of the
value of assets mortgaged this way since 2000. There were a lot of legislative changes
that were required before the product could be introduced in the US. The Australian
experience has also been similar.
1.4 Concept of Reverse mortgage
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Most reverse mortgage lenders in USA require primary lien position. The security for the
loan is the property itself; the loan is nonrecourse. If the borrower meets all the conditions
of the loan, when the owner moves or dies, the owner or heir is responsible for repaying
the loan obligation either through the sale of the property or other assets. If the loan
obligation is less than the sale price, the owner or estate keeps whatever amount is left
over. If the home is worth less than the amount due, the owner and heirs are not obligated
for any shortfall.
Reverse mortgage lenders can accelerate repayment at any time if the borrower defaults
through failure to pay property taxes , failure to maintain a valid hazard insurance policy
abandonment of the home, renting the home to someone else, or adding a new owner to
the title.
The various reverse mortgage products have similar structural features. When a home
owner meets the appropriate qualification, there is the offer of a loan that can be taken as
a lump sum, as an income stream, or as a line of credit, with various degrees of flexibility
permitted between methods of borrowing. The income stream can be taken either for a
fixed term, or as an annuity. The amount of money that can be borrowed depends on the
age of the borrower, the value of the house, and some interest rate variables.
1.5 Legal aspects of reverse mortgage
In Para No 89 of the Union Budget Speech 2007-08, Finance Minister proposed that
'National Housing Bank' (NHB) will shortly introduce a novel financial product for senior
citizens: a 'reverse mortgage' under which a senior citizen who is the owner of a house
can avail of a monthly stream of income against the mortgage of his/her house, while
remaining the owner and occupying the house throughout his/ her lifetime, without
repayment or servicing of loan. The NHB has come up with draft operational guidelines
for the same to banks in March 2007.
1.6 Valuation of a reverse mortgage
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In order to qualify for a reverse mortgage, the household head must be age 62 or above,
and either own the home free and clear, or at least be able to pay off all remaining debt
with the proceeds of the loan. There are additional requirements that are related to the
condition of the property at the time of purchase. Once the household qualifies, an initial
“principal limit factor” is set determining the maximum loan available to the borrower.
As time passes, the limit factor grows according to a formula based on interest rates and
certain ongoing insurance costs.
The principal limit factor on a new loan is determined by a fixed function that depends
only on the age of the youngest borrower, “adjusted property value” or maximum, claim
amount, which is the minimum of the appraised value of the house less the maximum
loan, and the “expected average mortgage interest rate”, premium over the risk free rate
for mortgage products.
No matter what the payment plan, the amount of the loan principal is based on the amount
of equity in the house, expected appreciation in the property’s value, market interest rates,
and the youngest borrower’s age and life expectancy. The larger the equity and greater
the appreciation expected, the lower the risk that the loan principal and accrued interest
will exceed the market value of the property when the loan becomes due. Higher interest
rates mean more interest will accrue, increasing the risk that the loan obligation will
exceed collateral value. The longer the owner lives, the greater the loan obligation
whether the barrower chooses the annuity or lump sum with accrued interest option.
1.7 Risk factors in a reverse mortgage
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Given the nature of the product, the long-term impact of interest rates and appreciation in
real-estate prices, there are a lot of risk factors that are associated with a product like
reverse mortgage.
Risk factors in reverse mortgage for Lenders
Longevity
Interest rates and
Future property values
The uncertainty of borrower longevity and tenure makes it difficult to estimate the
timings of repayment and, therefore, the return the loan will yield.
The more serious risk that the reverse mortgage provider bears concerns with the growth
in the principal limit factor over a period of time. There is “crossover risk”, which is
realized when the principal limit factor exceeds around 90 percent of the house value.
From this point on, the lender is unable to recover the full amount owed.
To avoid crossover risk, the loan amount must be set low enough to ensure the collateral
will retain sufficient value to cover the lien as the property ages over this uncertain
period.
Longevity risk is a diversifiable risk that can be effectively managed through the pooling
of a large numbers of loans. Then the lender or insurer can rely on mortality tables to
estimate future loan terminations. Although one might expect an adverse selection
problem, experience has shown that many borrowers are attracted to reverse mortgage
program especially because they are ill.
The moral hazards problems exists as the home owner has little financial incentive to
make expenditures for improvements or maintenances that would help maintain the value
of the property and may be physically unable to do so. Over time, the equity level is
diluted there may be gradual decrease in the overall maintenance conducted by the home
owners. This leads to gradual deterioration of the neighbourhood, resulting in lower rental
values.
Also, the secondary market for reverse mortgage houses does not exist. Moral hazard of
the problem can compound this by introducing a ‘lemon’s problem where all the reverse
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mortgage houses have lower overall house values. Risk can act as a deterrent to suppliers
of the product who wish to enter the market.
For purposes of financial reporting, the lender records the outstanding dollars of the
reverse mortgage as an asset. However, future payments to which the lender is committed
are not shown on its financial statements, resulting in off-balance sheet liabilities. Both
the interest and any shared appreciation component added to the loan balance are taxable
as current income, even though the lender has not received any payments from the
borrowers.
Risk factors in reverse mortgage for home owners
The risk faced by borrowers in reverse mortgage is also substantial. Borrowers don’t have
the same capacity to diversify that lenders have. For a home owner, there is a trade-off
between using housing wealth as a hedge against lump sums cash outflows such as
medical expenses vs. using housing wealth to append to existing sources of income. The
trade-off is important in the decision to go for reverse mortgage. Elderly homeowners put
off the decision of reverse mortgage since there is no external motive, which force them
to a decision.
The risk faced by the borrowers on a reverse mortgage includes the ability to predict
definitively their cash requirements at various times.
The second important factor is the bequest motive. Elderly homeowner prefers to live
their homes as a bequest to their heirs. This works as a social security for the family,
especially in countries in the less-developed world. If the elderly home owner begins to
draw down on their home-equity, there is incentive for heirs to provide for their needs,
financially, or emotionally. The choice of drawing down on home equity can therefore
reduce the social security available from the family.
1.8 Research Design
Statement of the problem
Asset ownership structure in India suggests that housing wealth constitutes major portion
of the non-pension wealth of the elderly. The problem that many house owners face is on
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how to tap into this housing wealth for consumption without selling the house and
moving. The best way to tap into house wealth is Reverse Mortgage. Some preliminary
analyses are also provided to document how a large segment of elderly citizens will
benefit from such a program.
The Study is focused on analyzing the process of reverse mortgage and its awareness
level in the minds of senior citizens. And also to study the merits and demerits of reverse
mortgage. To study the various issues like taxation, legal formalities of reverse mortgage.
Objective of the study
The present study has been undertaken to meet the following specific objectives,
To study the awareness of reverse mortgage in the minds of senior citizens in
Bangalore
To analyze Pros and cons of Reverse mortgage for senior citizens.
To study the reverse mortgage process
To find out the reason for it has been failed in initial stage in India
To study the various benefits/facilities available in Reverse mortgage to senior
citizens in India.
To arrive at the reasonable conclusion by analyzing the process of reverse
mortgage.
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Scope of Study
This project report analyses the potential for reverse mortgage products in India by
identifying segments of the population that are most likely to utilise such a product. The
characteristics that determines the segments are
a. The lack of state-sponsored pension program and
b. The ownership of defined type of house asset (with high home equity) on which
the reverse mortgage can be availed.
The study is aimed at establishing that a potential demand for reverse mortgage exists in
India and it will increase liquity in the market. It would also increase the market
efficiency by providing appropriate risk adjusted return on home property. Calculations
from census of India 2001, and other related national and international sources are
considered to show that over 10% of Indian workforce will be potential market for
reverse mortgage.
Research Methodology
This project is Descriptive as well as analytical in nature
Sampling Technique
Population: Senior citizens in Bangalore city
Sample Size: 100
Sampling type: Convenience Sampling
Souses of data: Primary data from Questionnaire and secondary data from magazines,
published Reports, journals ,websites, audio visual media etc.,
Tools for Data analysis
Pie chart, Bar chart, Column chart by using Ms-Excel and SPSS software.
Method of Analysis:
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The primary data collected through structured questionnaire. The analysis of data is done
by using percentages and pie charts and bar charts whenever it is required.
Limitations of the Study
1. The study covers only the awareness level of elder people on reverse
mortgage.
2. The research covers the opinion of only the senior citizens of Bangalore.
3. Time is the main constraint in this project for collecting questionnaire
samples. Only 100 samples are collected due to time limits which may not
generalise the population.
Layout of Chapters
1. Introduction
2. Profile of Industry
3. Research methodology
4. Data analysis and interpretation
5. Findings ,suggestions and Conclusion
Review of Literature
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About Reverse Mortgage
Reverse Mortgage is a mortgage loan for senior citizens who are not eligible for
any form of mortgage loan.
Eligible borrower should be a senior citizen of India above 60 years of age.
The lender makes periodic payments (including lump sum payments) to the
borrower i.e. the payment stream is “reversed”, as compared to a conventional
mortgage.
Maximum period of the loan – 15 years.
The loan is not required to be serviced i.e. payment of instalment or interest, as
long as the borrower is alive and in occupation of the property.
On the borrower’s death or on the borrower leaving the house property
permanently, the loan is repaid along with accumulated interest, through sale of
the house property. The borrower’s heir can also repay the loan with accumulated
interest and have the mortgage released without resorting to sale of the property.
After adjusting the principal amount of the loan and accumulated interest, surplus,
if any, will go to the estate of the deceased.
The borrower will also have the option of prepaying the loan at any time during
the loan tenor or later (NHB has advised lenders not to levy any prepayment
charge).
Periodicity: The loan will be extended as regular monthly, quarterly, half-yearly,
annual periodic cash advances or as a line of credit to be drawn in time of need or
in lump sum.
Married couples will be eligible as joint borrowers for financial assistance. In such
a case, the age criteria for the couple would be at the discretion of the Primary
Lending Institutions (PLI), subject to at least one of them being above 60 years of
age.
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The person should be the owner of a self-acquired, self occupied residential
property (house or flat) located in India, with clear title indicating the prospective
borrower’s ownership of the property. The residential property should be free
from any encumbrances.
The residual life of the property should be at least 20 years.
The prospective borrowers should use that residential property as permanent
primary residence. For the purpose of determining that the residential property is
the permanent primary residence of the borrower, the PLIs may rely on
documentary evidence, other sources supplemented by physical inspections.
With a Reverse Mortgage, the borrower remains the owner of the property. In the
absence of social security, Reverse Mortgage Loan serves as a partial substitute
for senior citizens.
Reverse Mortgage in India
The concept of reverse mortgage, although new in India, is very popular in countries like
the United States. Recently, National Housing Bank (NHB), a subsidiary of the Reserve
Bank of India (RBI), released draft norms of reverse mortgage (the final guidelines are
awaited). Following are some of the key features of the scheme from the draft norms.
1. Reverse Mortgage Loans (RMLs) are to be extended by Primary Lending Institutions
(PLIs) viz. Scheduled Banks and Housing Finance Companies (HFCs) registered with
NHB. The PLIs reserve their discretion to offer Reverse Mortgage Loans. Prospective
borrowers are advised to consult PLIs regarding the detailed terms of Reverse Mortgage
Loan as may be applicable to them.
2. Eligible Borrowers:
Should be Senior Citizen of India above 60 years of age.
Married couples will be eligible as joint borrowers for financial assistance. In such
a case, the age criteria for the couple would be at the discretion of the PLI, subject
to at least one of them being above 60 years of age. PLIs may put in place suitable
safeguards keeping into view the inherent longevity risk.
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Should be the owner of a self- acquired, self occupied residential property (house
or flat) located in India, with clear title indicating the prospective borrower's
ownership of the propertssssssssy.
The residential property should be free from any encumbrances.
The residual life of the property should be at least 20 years.
The prospective borrowers should use that residential property as permanent
primary residence. For the purpose of determining that the residential property is
the permanent primary residence of the borrower, the PLIs may rely on
documentary evidence, other sources supplemented by physical inspections.
3. Determination of Eligible Amount of Loan:
The amount of loan will depend on market value of residential property, as
assessed by the PLI, age of borrower(s), and prevalent interest rate.
The table given hereunder may serve as an indicative guide for determining loan
eligibility :
T1: The table showing determination of loan as proportion of assessed value
of property
Age Loan as proportion of Assessed Value of Property
60 – 65 40%
66 – 70 50%
71 – 75 55%
Above 75 60%
The above table is indicative and the PLIs will have the discretion to determine
the eligible quantum of loan reckoning the ‘no negative equity guarantee' being
provided by the PLI. The methodology adopted for determining the quantum of
loan including the detailed tables of calculations, the rate of interest and
assumptions (if any), shall be clearly disclosed to the borrower.
The PLI may consider ensuring that the equity of the borrower in the residential
property (Equity to Value Ratio - EVR) does not at any time during the tenor of
the loan fall below 10%.
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The PLIs will need to re-value the property mortgaged to them at intervals that
may be fixed by the PLI depending upon the location of the property, its physical
state etc. Such revaluation may be done at least once every five years; the
quantum of loan may undergo revisions based on such revaluation of property at
the discretion of the lender.
4. Nature of Payment: Any or a combination of the following:
Periodic payments (monthly, quarterly, half-yearly, annual) to be decided
mutually between the PLI and the borrower upfront
Lump-sum payments in one or more trenches
Committed Line of Credit, with an availability period agreed upon mutually, to be
drawn down by the borrower
Lump-sum payments may be made conditional and limited to special requirements
such as medical exigencies, home improvement, maintenance, up-gradation,
renovation, extension of residential property etc. The PLIs may be selective in
considering lump-sum payments option and may frame their internal policy
guidelines, particularly the eligibility and end-use criteria. However, these
conditions shall be fully disclosed to potential borrowers upfront.
It is important that nature of payments be decided in advance as part of the
Reverse Mortgage Loan covenants. PLI at their discretion may consider providing
for options to the borrower to change.
5. Eligible End use of funds
The loan amount can be used for the following purposes:
Up gradation, renovation and extension of residential property.
For uses associated with home improvement, maintenance/insurance of residential
property
Medical, emergency expenditure for maintenance of family
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For supplementing pension/other income
Repayment of an existing loan taken for the residential property to be mortgaged
Meeting any other genuine need
Use of Reverse Mortgage Loan for speculative, trading and business purposes
shall not be permitted
6. Period of Loan: Maximum 15 years.
7. Interest Rate: The interest rate (including the periodic rest) to be charged on the
Reverse Mortgage Loan to be extended to the borrower(s) may be fixed by PLI in the
usual manner based on risk perception, the loan pricing policy etc. and specified to the
prospective borrowers. Fixed and floating rate of interest may be offered by the PLIs
subject to disclosure of the terms and conditions in a transparent manner, upfront to the
borrower.
8. Security:
The Reverse Mortgage Loan shall be secured by way of mortgage of residential
property, in a suitable form, in favour of PLI.
Commercial property will not be eligible for Reverse Mortgage Loan.
9. Valuation of Residential Property:
The residential property should comply with the local residential land-use and
building bye laws stipulated by local authorities, with duly approved lay-out and
building plans.
The PLI shall determine the Market Value of the residential property through their
external approved valuer(s). In-house professional valuers may also be used
subject to adequate disclosure of the methodology.
The valuation of the residential property is required to be done at such frequency
and intervals as decided by the PLI, which in any case shall be at least once every
five years. The methodology of the revaluation process and the
frequency/schedule of such revaluations shall be clearly specified to the borrowers
upfront.
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PLIs are advised not to reckon expected future increase in property value in
determining the amount of RML. Should the PLIs do so in their best commercial
judgment, they may do so under a well defined Policy approved by their Board
and based on professional advice regarding property prices.
10. Provision for Right to Rescission:
As a customer-friendly gesture and in keeping with international best practices, after the
documents have been executed and loan transaction finalized, Senior Citizen borrowers
may be given up to three business days to cancel the transaction, the “right of rescission,”.
If the loan amount has been disbursed, the entire loan amount will need to be repaid by
the Senior Citizen borrower within this three day period. However, interest for the period
may be waived at the discretion of the PLI.
11. Loan Disbursement by Lender to Borrower:
The PLI will pay all loan proceeds directly to the borrower, except in cases
pertaining to retirement of existing debt, payments to contractor(s) for the repairs
of borrower's property, or payment of property taxes or hazard insurance
premiums from the borrower's account set aside for the purpose.
In case the residential property is already mortgaged to any other institution, the
PLI may, at its discretion, consider permitting use of part proceeds of RML to
prepay/repay the existing housing loan. The loan amount will be paid directly to
that institution to the extent of the loan outstanding with that institution with a
view to release the mortgage.
Periodicity: The loan will be extended as regular monthly, quarterly, half-yearly
or annual periodic cash advances or as a line of credit to be drawn down in time of
need or in lump sum.
The PLI will have the discretion to decide the mode of payment of the loan
including fixation of loan tenor, depending on the state and market value of the
property, age of the borrower and other factors. The rationale behind the decision
of mode of payment and fixation of the loan tenor shall be clearly disclosed to the
borrowers.
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12. Closing:
The PLIs will provide in writing, a fair and complete package of reverse mortgage loan
material and specimen documents, covering inter-alia, the benefits and obligations of the
product. They may also consider making available a tool kit to illustrate the potential
effect of future house values, interest rates and the capitalization of interest on the loan.
The closing costs may include the customary and reasonable fees and charges that may be
collected by the PLIs from the borrower. The cost for any item charged to the borrower
shall not normally exceed the cost paid by the lender or charged to the lender by the
provider of such service(s). Such items may include:
Origination, Appraisal and Inspection Fees. The borrower may be charged pro-
rata origination, appraisal and inspection fees by the PLI /appraiser.
Verification Charges of external firms
Title Examination Fees
Legal Charges/ Fees
Stamp Duty and Registration Charges
Property Survey and Valuation charges
A detailed schedule of all such costs will clearly be specified and provided to the
prospective borrowers upfront by the PLIs.
13. Settlement of Loan
The loan shall become due and payable only when the last surviving borrower
dies or would like to sell the home, or permanently moves out of the home for
aged care to an institution or to relatives. Typically, a "permanent move" may
generally mean that neither the borrower nor any other co-borrower has lived in
the house continuously for one year or do not intend to live continuously. PLIs
may obtain such documentary evidence as may be deemed appropriate for the
purpose.
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Settlement of loan along with accumulated interest is to be met by the proceeds
received out of Sale of Residential Property.
The borrower(s) or his/her/their estate shall be provided with the first right to
settle the loan along with accumulated interest, without sale of property.
A reasonable amount of time, say up to 2 months may be provided when Reverse
Mortgage Loan repayment is triggered, for house to be sold.
The balance surplus (if any) remaining after settlement of the loan with accrued
interest shall be passed on to the estate of the borrower.
14. Prepayment of Loan by Borrower(s)
The borrower(s) will have option to prepay the loan at any time during the loan
tenor.
There will not be any prepayment levy/penalty/charge for such prepayments.
15. Loan Covenants:
The borrower(s) will continue to use the residential property as his/her/their
primary residence till he/she/they is/are alive, or permanently move out of the
property, or cease to use the property as permanent primary residence.
Non-Recourse Guarantee: The PLIs shall ensure that all reverse mortgage loan
products carry a clear and transparent ‘no negative equity' or ‘non-recourse'
guarantee. That is, the Borrower(s) will never owe more than the net realizable
value of their property, provided the terms and conditions of the loan have been
met.
Loan Agreement: The PLIs shall enter into a detailed loan agreement setting out
there in the salient features of the loan mortgage security and other terms and
conditions, including disbursement and repayment of the loan, in addition to the
usual provisions, which are ordinarily incorporated in a mortgage loan document.
The loan agreement may also include a provision that the borrower shall not make
any testamentary disposition of the property to be mortgaged and even if it does
so, it would be subject to the mortgage created in favour of the lending institution.
In such a case, the borrower shall make a testamentary disposition of the
mortgaged property in favour of any of his/her relatives, subject to the discharge
of the mortgage debt by such legatee and a statement that the heirs shall not be
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entitled to challenge the validity of the mortgage as also the right of the mortgagee
to enforce the mortgage in the event of death of the borrower unless the legal
representative is willing to undertake the responsibility for discharging in full the
amount of loan and accrued interest thereof.
In addition, the PLI may also consider obtaining a Registered Will from the
borrower stating, inter-alia, that he/she has availed of Reverse Mortgage Loan
from the PLI on security by way of mortgage of the residential property in favour
of the PLI, meaning thereby that in the event of death of the borrower (and co-
borrower, if any), the mortgagee is entitled to enforce the mortgage and recover
the loan from the sale proceeds on enforcement of security of the mortgage. The
surplus, if any, has to be returned to the heirs of the deceased borrower(s).
The PLIs may consider taking an undertaking from the prospective borrower that
the “Registered Will” given to the PLI is the last “Will”, prepared by him/her at
the time of availment of Reverse Mortgage Loan facility as per which the property
will vest in his/her spouse name after his/her demise. The borrower will also
undertake not to make any other ‘Will' during the currency of the loan which shall
have any adverse impact on the rights created by the borrower in the PLI's favour
by way of creation of mortgage on the immoveable property mentioned under the
loan documentation for covering loan to be allowed to his/her spouse and interest
thereon, even after the borrower's death.
The PLI will ensure that the borrower(s) has insured the property against fire,
earthquake, and other calamities.
The PLI will ensure that borrower(s) pay all taxes, electricity charges, water
charges and statutory payments.
The PLIs will ensure that borrower(s) are maintaining the residential property in
good and saleable condition.
The PLI may reserve the option to pay for insurance premium, taxes or repairs by
reducing the homeowner loan advances and using the difference to meet the
obligations/expenditures.
The PLI reserves the right to inspect the residential property/premises or arrange
to have the residential property/premises inspected by its representatives any time
before the loan is repaid and borrower(s) shall render his/her/their cooperation in
respect of such inspections.
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16. Title Indemnity/Insurance
The PLI shall obtain legal opinion for ensuring clarity on the title of the residential
property.
The PLI shall also endeavour to obtain indemnity on title related risks, as and
when such indemnity products are available in India.
17. Foreclosure:
The loan shall be liable for foreclosure due to occurrence of the following events of
default.
If the borrower has not stayed in the property for a continuous period of 1
year
If the borrower(s) fail(s) to pay property taxes or maintain and repair the
residential property or fail(s) to keep the home insured, the PLI reserves
the right to insist on repayment of loan by bringing the residential property
to sale and utilizing the sale proceeds to meet the outstanding balance of
principal and interest.
If borrower(s) declare himself/herself/themselves bankrupt.
If the residential property so mortgaged to the PLI is donated or abandoned
by the borrower(s).
If the borrower(s) effect changes in the residential property that affect the
security of the loan for the lender. For example: renting out part or all of
the house; adding a new owner to the house's title; changing the house's
zoning classification; or creating further encumbrance on the property
either by way taking out new debt against the residential property or
alienating the interest by way of a gift or will.
Due to perpetration of fraud or misrepresentation by the borrower(s).
If the government under statutory provisions, seeks to acquiring the
residential property for public use.
If the government condemns the residential property (for example, for
health or safety reasons).
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18. Option for PLI to Adjust Payments:
The PLI shall have the option to revise the periodic/lump-sum amount at such
frequency or intervals based on revaluation of property, which in any case shall be
at least once every five years.
Borrower shall be provided with an option to accept such revised terms and
conditions for furtherance of the loan.
If the Borrower does not accept the revised terms, no further payments will be
effected by the Lender. Interest at the rate agreed before the review will continue
to accrue on the outstanding amount of the loan. The accumulated principal and
interest shall become due and payable.
19. Counseling and Information to Borrowers:
The PLIs will observe and maintain high standards of conduct in dealing with the
Senior Citizens and their families and treat them with special care.
The PLIs shall clearly and accurately disclose the terms of the Reverse Mortgage
Loan without any ambiguity.
The PLIs should clearly explain to the prospective borrowers the terms and
conditions of Reverse Mortgage Loan, the methodology followed for valuation of
the residential property, the method of determination of eligible quantum of loan,
the frequency of revaluation and review of terms and all related aspects of the
Reverse Mortgage Loan.
The PLIs may suggest to the Senior Citizens to nominate their ‘personal
representatives' usually a close relative who the PLI can contact in the event of
any potentialities.
The PLIs may counsel the prospective borrowers about the possible impacts to the
borrowers due to adverse movements in interest rates and property price
fluctuations.
The PLIs shall clearly specify all the costs to the Borrower(s) that are associated
with the transaction.
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The PLIs shall in no way assert or imply to the borrower(s) that the borrower(s) is/
are obligated to purchase any other product or service offered by the PLI or any
other associated institution in order to obtain a reverse mortgage loan.
Take reasonable steps to check out the background and procedures of third parties
before accepting referrals of business from them, and refuse to accept referrals
from those that are found unacceptable. Members shall disclose to clients any third
party with a financial interest in the reverse mortgage transaction.
Overall, the PLIs shall treat the Senior Citizen borrower fairly.
As the old saying goes, “there are no free lunches in life”. In case of reverse mortgage,
there exist a few guidelines, which may not 'appeal' to the house property owner i.e. the
borrower.
1. As per the guidelines, the maximum loan tenure can be 15 years. So, if the borrower
outlives the loan tenure, he can continue to stay in the house. However he will no longer
be eligible for any payments from the bank/HFC.
2. The bank/HFC shall have the option to revise the periodic/lump sum amount at such
frequency or intervals based on revaluation of property, or at least once every 5 years.
The borrower will be provided the option to accept the revised terms and conditions to
continue the loan. However, if he refuses to accept the revised terms and conditions, no
further payments shall be made by the bank/HFC. Interest at the rate agreed before the
review will continue to accrue on the outstanding loan amount.
3. Since the reverse mortgage can be either at fixed or floating rates, it will be prone to
the interest rate movements.
4. Under the reverse mortgage, the legal heirs of the owner are not entitled to take control
over the mortgaged property up to the extent of the outstanding loan. They are required to
first repay the outstanding loan amount along with the interest to stake a claim on the
property.
5. The banks/HFCs at their discretion may levy penalty or other charges on the
prepayment of loan. So, if the borrower or his heirs wish to prepay the loan amount, they
may have to bear an additional cost.
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The most important advantage offered by the reverse mortgage scheme is that despite
mortgaging the house, the house owner retains its ownership, is entitled to live in the
same throughout his lifetime and also has access to a regular income stream, which can
help meet his day-to-day needs. From the banks/HFC's perspective, the mortgage on the
property in its favor ensures that there is no scope for default.
Individuals who wish to opt for the reverse mortgage scheme would do well to acquaint
themselves with the nitty-gritty’s of the guidelines.
Affordable Housing for Older People by ‘Aged and community services’ in
2008:
This report has highlighted a range of affordable housing issues as well as the
growing importance of reverse mortgage in today’s world. As an individual we
need to consider and determine how we address these issues and ensure we are
providing the best care and services to the senior citizens. There are some possible
actions we can take to begin addressing this issue.
Reverse mortgage loan scheme for the senior citizens of Delhi By Delhi
research organization in 2009:
The report covered that level of awareness of reverse mortgage in the minds of
senior citizens of New Delhi and also covered the eligibility criteria to avail
reverse mortgage service.
‘Emergence of Reverse mortgage in India’ by Dewan corporation in 2009:
The report covered the legal aspect and tax aspects of reverse mortgage.
Reverse Mortgage: Option for senior citizens by Kavita Sriram in 2009
(Times of India dated Oct 11 2009)
The report covered the process of Reverse mortgage.
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Reverse Mortgage: A failure in India?(Rediff.com dated March 03, 2008)
This article says-The finance minister's budget proposals last year included the
introduction of the reverse mortgage facility for senior citizens in India
Recent reports seem to indicate that less than 150 people have taken advantage of the
facility since its inception and it is, therefore, likely to be considered a failure. This is
unfortunate because the facility simply has not been adequately explained. It was also
unattractively packaged.
The reverse mortgage facility allows senior citizens to unlock the value of their most
valuable asset, their home, by mortgaging it and enjoying the use of the money in their
lifetime while continuing to live in it until their deaths.
It is a well-entrenched idea in many developed countries in the West where its terms are
such that only home-owners above a given age (typically 60-65 years) may apply.
The bank makes an evaluation of the current value of the home, decides the likely
lifespan of the applicant home-owner (and his/her spouse), and, decides what percentage
of the current value they are willing to loan them. The bank also fixes the interest rate it
wishes to apply.
Typically, the loan amount seldom is lower than 60-70 per cent of the market value of the
property. The applicants have the option of taking the loan principal in a single lump-sum
amount or by a fixed monthly amount instead.
From time to time, the value of the property is re-visited by both parties. If the valuation
has increased, the applicants are given the option of increasing the quantum of the loan,
and should they do so, are given the incremental amount in lump-sum.
If they have opted for the monthly payment scheme, this amount is appropriately
increased. The principal plus interest charges accrue at the bank while the applicants live
on in the home for the lengths of their lives - or until they decide to sell the home,
whichever comes earlier.
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If they choose to sell it, they have to pay the bank all the accrued amounts. On the death of
the second of the two spouses, the heirs to the property decide either to redeem the loan and
keep the property, or sell the property and take the residual amount that may accrue
from the sale after settling with the bank.
Should the sale proceeds be lower than the accrued principal plus interest amount, the
bank takes the loss. (This could happen if the real estate market has not moved up in the
manner the bank had estimated originally. However experience of the past indicates that
the banks seldom lose, as they factor this likelihood in setting the percentage of the
current value they loan the applicants.)
The Indian banking industry must not complicate the scheme as it has done. The
industry's offer caps the available loan amount at Rs 50 lakh, instead of providing for an
equitable percentage of the property's value, and limits the loan period to tenure of 15
years.
It is possible that most Indians will not sell the family home, and would prefer passing it
on to the next generation, even if they have to live in relative penury during their waning
years because of the small income. However, many Indian traditions and values have
changed in the last 15 years. This is like many other things.
For example, we hated debt and dreaded living on borrowed funds. The Diners Club
credit card was introduced in India in the 1960s. It never ever took off. But today's new
generation has upturned that.
More credit cards are issued in India per month than in most countries in the world, and
cards have changed the way life is lived. The increasing GNP and the surge of the
manufacturing and service sectors owe much to the great surge in consumer purchasing,
including of expensive aspirational goods and real estate.
The urge for a better life NOW is almost fundamental to the way the younger generation
perceives its goals.
Another example has to do with the tradition that parents moved in with one or the other
of their children when they grew old. That too is changing.
Work opportunities are moving young people away to new cities, even new countries,
where their parents cannot or will not follow them. And even in the same cities, many
"modern" parents prefer to live on their own.
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Further, in many cases, the children do not want to inherit the parents' home. Should they
do so, they sell it anyway because they have moved on to bigger and better things. There
are also old folk without children, and old folk out of luck with their children. In both
cases, they are short of the cash to even pay essential bills.
So while the reverse mortgage idea may not take off in India as it has in the West, where
social and parent-child behaviour usually dictates that the old folk live off their very last
penny before they die, there are sufficient demographic and psychographic data to
indicate that in India there are takers in the millions who, for one reason or another, are
likely candidates for the reverse mortgage idea.
In any event, the proposal should be given the opportunity to fail for the right reasons.
And that means it should be packaged and marketed in a way that makes sense to the
likely customer.
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Profile of the Industry
3.1 Introduction: Banking sector
The Indian Banking industry governed by the Banking Regulation Act of India, 1949,
falling into two broad classifications, non-scheduled banks and scheduled banks. Within
the commercial banks there are nationalized banks, the State Bank of India and its group
banks, regional rural banks and private sector banks.
With the economic growth picking up pace and the investment cycle on the way to
recovery, the banking sector has witnessed a transformation in its vital role of
intermediating between the demand and supply of funds. The revived credit off take (both
from the food and non food segments) and structural reforms have paved the way for a
change in the dynamics of the sector itself. Besides gearing up for the compliance with
Basel accord, the sector is also looking forward to consolidation and investments on the
FDI front.
Retail lending (especially mortgage financing) has been grabbing a major share of the
market in the last 3 years. With better penetration in the semi urban and rural areas the
banks garnered a higher proportion of low cost deposits thereby economizing on the cost
of funds.
Apart from streamlining their processes through technology initiatives such as ATMs,
telephone banking, online banking and web based products, banks have also resorted to
cross selling of financial products such as credit cards, mutual funds and insurance
policies to augment their fee based income.
RBI's soft interest rate policy has helped increase the liquidity in the market, and banks
have been liquidating their gilt portfolios partially to free resources for lending. Credit off
take is expected to be reasonably good both on retail and corporate sides. Following the
advice of the government banks have increased lending to agricultural sector, while
ensuring good quality lending by informed customer analysis.
Currently the banking sector in the country is strongly fragmented and hence with further
policy changes taking place in the sector, consolidation is likely to take place at a faster
rate. However this is subject to the removal of the ceiling on voting rights will ensure that
private sector and foreign banks will be in a much better position to carry out acquisitions
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in the banking sector. A hike in FDI capital limits in the sector would further go a long
way in the process of consolidation. In terms of credit growth, going forward, India's core
sector is witnessing a revival of sorts. The manufacturing sector has shown significant
improvement in FY05. Hence as corporate growth picks up lending too is likely to see an
uptick. Retail credit off-take is expected to remain strong going forward with the housing
finance industry, the main contributor to credit off-take from this segment, expected to
grow between 20%-25% in the next 3-4 years.
Indian banks have to be encouraged to expand fast, both through organic growth and
through consolidation, in order to fuel the growth of large firms and to strengthen their
risk assessment systems, for catering to the requirements of smaller firms. Various policy
measures are in process to help this transition along. However, when we look at the
global scenario, only 22 Indian banks figure in the list of top 1000 banks and there are
only 5 Indian banks in the list of top 500 banks. The biggest Indian bank, State Bank of
India, has a market capitalization of under US$ 10 billion compared to the market
capitalization of US$ 243 billion of Citigroup. Indian banking sector has a long way to go
before we can say that Indian banks are relatively significant players. Having said that,
there are sufficient reasons to believe that the Indian Banking sector is poised for
tremendous growth and with proper policy framework in place, it would be very soon,
matching their global counterparts on most of the relevant banking indicators/ parameters
(except size for some time to come).
3.2 Indian Banking System:
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For the past three decades India's banking system has several outstanding achievements to
its credit. The government's regular policy for Indian bank since 1969 has paid rich
dividends with the nationalization of 14 major private banks of India. The first bank in
India, though conservative, was established in 1786. From 1786 till today, the journey of
Indian Banking System can be segregated into three distinct phases. They are as
mentioned below:
Nationalisation of Indian Banks and up to 1991 prior to Indian banking
sector Reforms.
New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.
Phase I
During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To
streamline the functioning and activities of commercial banks, the Government of India
came up with The Banking Companies Act, 1949 which was later changed to Banking
Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of
India was vested with extensive powers for the supervision of banking in India as the
Central Banking Authority.
Phase II
The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:
1949: Enactment of Banking Regulation Act.
1955: Nationalisation of State Bank of India.
1959: Nationalisation of SBI subsidiaries.
1961: Insurance cover extended to deposits.
1969: Nationalisation of 14 major banks.
1971: Creation of credit guarantee corporation.
1975: Creation of regional rural banks.
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1980: Nationalisation of seven banks with deposits over 200 crores.
Phase III
In 1991, under the chairmanship of M Narasimham, a committee was set up by his name
which worked for the liberalisation of banking practices. The country is flooded with
foreign banks and their ATM stations. Efforts are being put to give a satisfactory service
to customers. Phone banking and net banking is introduced. The entire system became
more convenient and swift. Time is given more importance than money.
3.3 Current Scenario:
The Indian Banking industry has been undergoing rapid changes reflecting a number of
underlying changes. Liberalization and deregulation witnessed in the Indian markets in
the 1990s have resulted in a spurt in banking activity in India. Significant advances in
communication have enabled banks to expand their reach, both in terms of geography
covered as well as new products introduced. With increased competition in wholesale
banking due to the entry of foreign banks and new private sector banks, the sector has
witnessed a squeeze in margins. This has led to banks increasing their focus on retail
banking so as to obtain access to low cost funds and to expand into relatively untapped,
potential growth areas. Banks and financial institutions are thus continuously exploring
new avenues for increasing their footprint and safeguarding their margins.
Competition from multinational banks and entry of new private sector banks has rewritten
the rules of the retail lending business in India. Slow growth in corporate lending,
pressure on corporate spreads due to competition and concerns over asset quality have
induced public sector banks to follow the private sector banks in placing emphasis on
growth through expansion of retail portfolio.
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Different reverse mortgage offerings in India
3.4 State Bank of India
The State Bank of India (SBI) started offering reverse mortgage products for senior
citizen on October 12, 2007. Joint loans are given if the spouse is alive and is over 58
years of age.
The loan is offered by all branches of SBI from October 12, 2007. The loan is offered at
an interest rate of 10.75% pa and is subject to change at the end of every five years along
with revaluation of security. Every five years, bank may even re-adjust the loan
installments, if it is needed, depending on market conditions and loan status.
The Chief General Manager for Personal Banking (SBI), Mr. Sangeet Shukla told that
there is no upper limit of amount of loan. Also, the maximum period for availing this
benefit is 15 years.
Under this loan, borrowers can be avail payment against the security of their houses on
monthly or quarter installments or either he/she can go for as a lump sum payment at the
beginning.
During their lifetime, the borrower does not have to pay the loan and will continue to stay
in their house. Thereafter, either the legal heirs can repay the loan and redeem the
property but if this option is not exercised, bank will sell the property and liquidate the
loan. Surplus, if any, will be passed on to the legal heirs.
T2: Table showing details of SBI Reverse Mortgage Loan
No. Parameter Details
(1) Objective of the To provide a source of additional income for senior citizens of
scheme India who own self-acquired and self-occupied house property
in India.
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(2) Eligibility
a. No. of borrowers Single or jointly with spouse in case of a living spouse.
b. Age of first Above 60 years
borrower
c. No. of surviving Should not be more than one. Borrowers will have to give an
spouses on the date undertaking that they will not remarry during the currency of
of sanction of loan the loan. If the borrowers choose to remarry, the loan will be
foreclosed.
d. Age of spouse Above 58 years
e. Residence Borrower should be staying at self-acquired and self
owned house /flat against which loan is being raised,
as his permanent primary residence.
Mobile/Telephone/Credit Card bills/ Certificate from
the Housing Society where the borrower is staying /
Affidavit made before the Executive Magistrate may
be accepted as proof of residence.
Borrowers will be required to inform the Bank when
they cease to use this residence as their permanent
residence.
f. Title of the Property Borrowers should have a clear and transferable title in
their names.
Title verification and search report for a period of 30
years will be required to be obtained from the Bank’s
empanelled advocate at borrowers’ cost.
g. Title of the property Case– Title in single name and loan availed jointly with
and number of spouse.
borrowers.
Title holder should make a Will in favour of the other spouse.
The Will should confirm that this is the last Will and that it
super cedes all earlier Wills, if any. The borrower to undertake
that no fresh Will shall be made during the currency of the
loan.
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(3) Security The RML shall be secured by way of equitable mortgage of
residential property.
(4) Tenor Age of the younger of the borrowers
between 58 and up to 68 years:15 years
Age of the younger of the borrowers
above 68years:10 years
OR till death of the borrower(s), whichever is earlier.
(5) Disbursement By credit to an SB account in the joint names of the borrowers
operated by E or S.
(6) Periodicity of availing 1.Monthly / quarterly payments
loan
2.Lumpsum payment
(7) Quantum of loan The loan amount would be 90% of the value of property. Loan
amount would include interest till maturity. The loan
instalments payable to the borrower(s) would be as under for a
loan amount of Rs.1 lac (at interest rate of 10.75% p.a.):
Loan Tenor (years) 10 15
Monthly instalments (Rs.) 468 225
Quarterly instalments (Rs.) 1,423 687
Lump sum payment (Rs.) 36,022 21,619
The
maximum loan amount is kept at Rs.1 Crores (monthly
payment Rs.22,500/- for 15 years) and minimum Rs.3 lacs
(monthly payment Rs.675/- for 15 years).
Example of arriving at the monthly instalments:
Property value:Rs.10 lacs
Qualifying loan amount
(90% of property value):Rs.9 lacs
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Tenure:15 years
Monthly instalment: Rs. 225 x 9 = Rs.2,025/-
(8) Purpose of Loan Supplementing income, any personal expenses, house repairs,
etc. Loan amount should not be used for speculative, trading
and business purposes.
(9) Repayment/SettlementThe loan shall become due and payable only when thelast
surviving borrower dies or opts to sell the home, or
permanently moves out of the home for to an institution or
to relatives. Typically, a "permanent move" may generally
mean that neither the borrower nor any other co-borrower
has lived in the house continuously for one year or do not
intend to live continuously. Bank may obtain such
documentary evidence as may be deemed appropriate for
the purpose.
Settlement of loan along with accumulated interest is
to be met by the proceeds received out of sale of
residential property or prepayment by borrowers and
his next of kin.
The borrower(s) or his/her/their legal heirs / estate
shall be provided with the first right to settle the loan
along with accumulated interest, without sale of
property.
A reasonable amount of time, say up to 6 months, may
be provided when RML repayment is triggered, for
house to be sold.
The balance surplus (if any), remaining after
settlement of the loan with accrued interest and
expenses, shall be passed on to the borrower or the
estate of the borrower/legal heirs.
Borrowers will be required to submit annual life
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certificates in the month of November every year. This
certificate will also include clauses regarding marital
status, and permanent residence of the borrowers, in
addition to the balance confirmation as on 31st
October of that year.
List of legal heirs will be obtained at the time of
sanction of loan. With a view to avoiding disputes at
the time of settlement of loan amount by legal heirs,
specific instructions about inheritance of the property
and payment of balance amount, if any, of the sale
proceeds after settling the Bank’s dues, will be
required to be part of the borrowers’ Will.
(10) Foreclosure The loan shall be liable for foreclosure due to
occurrence of the following events of default.
If the borrower(s) has/have not stayed in the property
for a continuous period of one year
If the borrower(s) fail(s) to pay property taxes or
maintain and repair the residential property or fail(s) to
keep the home insured, the Bank reserves the right to
insist on repayment of loan by bringing the Residential
property to sale and utilizing the sale proceeds to meet
the outstanding balance of principal and interest.
If borrower(s) declare himself/herself/themselves
bankrupt.
If the residential property so mortgaged to the Bank is
donated or abandoned by the borrower(s).
If the borrower(s) effect changes in the residential
property that affect the security of the loan for the
lender. For example: renting out part or all of the
house by creating a tenancy right; adding a new owner
to the house's title; changing the house's zoning
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classification; or creating further encumbrance on the
property either by way of taking out new debt against
the residential property or alienating the interest by
way of gift or will.
Due to perpetration of fraud or misrepresentation by
the borrower(s).
If the government under statutory provisions, seeks to
acquire the residential property for public use.
If the government condemns the residential property
(for example, for health or safety reasons).
Any other event such as re-marriage of the borrower(s)
etc which shall have an adverse impact on the loan
settlement prospects.
Borrowers do not accept the revised terms on
revaluation of property and interest reset at the end of
every 5 years from sanction.
Any violation of the terms and conditions of RML.
(11) Pre-payment of loanThe borrower(s) will have option to prepay the loan atany time
during the loan tenor.
There will be no prepayment penalty.
(12) Valuation/Revaluation After the initial valuation to determine the loan
of property and option amount, subsequent revaluations will be done at
for the Bank to adjust intervals of 5 years.
payments.
The Bank shall have the option to revise the
periodic/lump-sum amount every 5 years along with
revaluation. In the scenario of fall in property prices,
the Bank may decide to revise the amount at any time
earlier than 5 years. At every stage of revision, it
should be ensured that the Loan to Value ratio does not
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exceed 90% at maturity.
If the Borrower does not accept the revised terms, no
further payments will be affected by the Bank. Interest
at the rate agreed before the review will continue to
accrue on the outstanding amount of the loan. The
accumulated principal and interest shall become due
and payable as mentioned in clauses 9 and 10.
(13) Interest Rate 10.75% p.a. (Fixed) subject to reset every 5 years.
(14) Processing fee 0.50% of the loan amount, minimum Rs.500/- and maximum
of Rs.10,000/-
(15) Right of Rescission As a customer-friendly gesture and in keeping with
international best practices, after the documents have been
executed and loan transaction finalized, borrowers will have
right of rescission up to seven days to cancel the transaction.
If the loan amount has been disbursed, the entire loan amount
will need to be repaid by the borrower within this period.
However, interest for the period may be waived. Processing
fee shall not be refunded in such cases.
(16) Insurance and The house property will be insured by the borrower at
maintenance of house his cost against fire, earthquake and other calamities.
property
The borrower shall ensure to pay all taxes, charges etc.
Bank reserves the right to pay insurance premium,
taxes, charges etc. by reducing the loan amount to that
extent.
The borrower shall maintain the property in good
condition.
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(17) Operational issues:
a. Type of facility Non-renewable Overdraft without ledger folio charges. No
cheque book / debit card will be linked to this account.
b. Availability of All branches.
product
3.5 REVERSE MORTGAGE LOAN – “PNB BAGHBAN’ FOR
SENIOR CITIZENS
PNB is the first Public Sector Bank to come out with a Reverse Mortgage concept based
product for senior citizen titled "PNB Baghban". The product addresses one of the very
important requirements of the society in the fast changing culture of Indian society. The
salient features of the product are given hereunder:
Objective
To address the financial needs of senior citizens owning self occupied property (house),
for leading a decent life.
Eligibility
The residential house/flat owner, who is resident of India, of the age of 60 years& above,
is eligible to raise the loan under this Scheme.
Qualifying/Maximum Amount of Loan/Margin
The qualifying amount of loan will depend on the realizable value of residential property,
after maintaining margin of 20%. The maximum qualifying amount of loan, along with
interest, shall be restricted to Rs.100 lac.
Rate of Interest
10% p.a. (fixed) subject to re-set clause of five years (as applicable for Housing Loan
Borrowers)
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Disbursement/tenor of loan
The loan shall be extended as regular fixed monthly payments during the loan period. I.e.
10-20 years or till the death of the last surviving spouse, whichever is earlier. Depending
on the age of the beneficiary a chart containing the amount of monthly instalments
( calculated on ‘Reverse Annuity Mortgage” basis) to be paid to the senior citizen
borrower for different tenors of loan per lac of rupees is as under :-
T3: Table showing Qualifying Loan Amount (Rs.1.00 lac)
Tenor (yrs.) 10 11 12 13 14 15 16 17 18 19 20
Monthly Instalment(Rs.) 490 420 360 315 275 240 215 190 170 150 135
Security
The loan shall be secured by way of equitable Mortgage of self acquired / self occupied
Residential Property in favor of the Bank. The property to be revalued every 5 years and
monthly loan installment to be re fixed keeping in view applicable ROI and valuation of
property.
Repayment of Loan
Settlement of loan, along with accumulated interest, to be met by the proceeds received
out of sale of residential property and any surplus to be paid to heirs. The loan will, as
such, become due for recovery and payable six months after death of the last surviving
spouse. However the legal heirs/legatee of the deceased borrowers will be given first
option to settle the loan, along with the accumulated interest, without sale of the property.
Upfront fee/Documentation Charges
Upfront fee – Amount equivalent to half+ month’s loan instalment subject to Maximum
of Rs.15, 000/-.
Documentation Charges/Inspection Charges - Nil
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Right of Rescission
After the loan is sanctioned senior citizen borrower(s) shall be given up to 10 days time to
relook into his requirements and if he so wishes to cancel the transaction for any reason
whatsoever.
3.6 Reverse Mortgage by DHFL
India's second-largest private housing finance company, Dewan Housing Finance
Corporation Limited (DHFL), is the first off the block In India with a reverse mortgage
scheme.
The scheme, called 'Saksham' is targeted at retired senior citizens above 60 years of age.
The scheme is similar to a housing loan except that in a home loan the borrower pays a
fixed EMI to the lending institution, while in reverse mortgage the lender pays the
borrower a fixed sum of money on a monthly (or quarterly) basis, the total payment being
equal to the value of the property and the interest on the loaned amount.
After the death of the borrower and the borrower's spouse, the housing company sells the
property to recover the amount paid out along with interest at a rate similar to interest on
housing loans.
The scheme is designed to supplement the monthly income of senior citizens. This
scheme is offered to retired people above the age of 60 years who own property and have
been living in it for at least one year.
The loan amount is sanctioned based on the:
Age of the borrower
Average value of the property
Rate of interest on the loan
The payment method chosen by the borrower
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The eligibility for a reverse mortgage loan is simple. The borrower should be 60 years of
age, living in self-owned property, which is free of any other encumbrances, and is an
approved construction. The amount loaned would depend on the estimated value of the
property (minus the interest cost) its condition and life. The loan does not apply to
ancestral property.
Saksham allows customers and their spouses to live in the property as long as they are
alive, without the fear of eviction even after the tenure expires. The surplus amount is
then paid to the legal heirs of the borrower. The legal heirs also have the option to re-
possess the property after the demise of both customers and their spouses.
According to Shivkumar Mani, head, marketing, DHFL, "As per the guidelines laid down
by NHB, DHFL is the first company to launch this scheme in India. This unique scheme
is designed to help senior citizens to sustain their lifestyle and also help them maintain
their monthly expenditure without being dependent on anyone. It is a social security
scheme designed to benefit the senior citizens post retirement."
DHFL will first launch Saksham in Mumbai and its adjoining areas before making it
available nationally.
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3.7 Reverse Mortgage by Union Bank
Union Bank of India on 4 April, 2008 launched its "Union Reverse Mortgage Scheme", a
loan product designed exclusively for the benefit of senior citizens. The bank is the fourth
in the country to launch the scheme through which the loan seeker need not worry about
re-payment and be assured of monthly income; the Bank's Bangalore Zone Field General
Manager LNVRao.
The loan will be available to homeowners who are 60 years of age or more and can be
availed jointly with the spouse, provided he or she is more than 55 years old. Unlike other
loan products, there are no income criteria to be met for availing loan. On the demise of
the last surviving owner, the legal heirs have the right to repay. If they do not wish to do
so, the bank will sell the property, set off the loan outstanding the surplus, if any, will be
given to legal heirs. The minimum loan amount that can be availed is Rs one lac and
maximum Rs 50 lac.
Seventy per cent of the assessed value of the building would be the loan amount. The
maximum tenor of a loan under this scheme is 15 years. The loan carries a fixed interest
of 10 per cent per annum. Typically, for a loan of Rs 10 lac, the monthly pay off to the
owner on ten year loan will be Rs 4880 and on a 15 year loan, it will be Rs 2410. The
property is revalued every five years and adjustments will be made to the monthly
payments accordingly. The borrower has to comply with certain conditions which include
that he bears the cost of property insured against fire, earthquake and other calamities. If
the borrower ceases to stay in the house which has been mortgaged, the loan will be
cancelled.
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3.8 LIC Housing to combine reverse mortgage with insurance plan
LIC Housing Finance is looking to combine its reverse mortgage plan with a whole-life
annuity provided by a life insurer. This will allow home owners to use their property to
generate income for life as against for only 15 years as provided under the present reverse
mortgage schemes. The housing finance arm of the Life Insurance Corporation on
Thursday announced the launch of its reverse mortgage scheme. This product is available
across the country for senior citizens above 60 years. The loan can be availed of either
singly or jointly with a spouse, if the spouse is also above 60. The shortcoming of most
reverse mortgage schemes is that it is available only for 15 years. With the increased life
expectancy, most borrowers are expected to outlive the term of their reverse mortgage.
Under present schemes while income from the reverse mortgage dries up after 15 years,
the borrowers end up with the lender having a lien on their property. LIC Housing
Finance chief executive SK Mitter told ET that the company was in talks with insurance
companies to work out a scheme where home equity could be used to buy an annuity that
provides income for the entire life span of the borrower. The reverse mortgage loan by
LICHF will be offered at a fixed interest rate, subject to reset every five years. Under the
scheme, senior citizens can avail of the loan either on a monthly payment or on a lump
sum payment or a combination of both. The property evaluated for the loan should have
at least 20 years of residual life. The maximum loan balance shall be 90% of the value of
the property and the loan balance will include interest till maturity. The amount of the
loan will take into consideration the property value, age of the borrower, and the rate of
interest. The loan will become due and payable only when the last surviving borrower
dies or opts to sell the home, or permanently moves out of the home.
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Data Analysis and Interpretation
Profile of the Respondents
4.1 Age of the Respondents:
The survey is done for all age groups. But 32% respondents are the age group of 60-65.
The eligible age group for reverse mortgage is above 60.
T4: The Table showing Number of respondents in different age group.
Age Respondents
< 50 10
50-60 26
60-65 32
65-70 26
> 70 6
C1: The chart showing number of respondents for age group
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Analysis:
The research is done by choosing the age group above 40 years. The distribution of age is
in between 40 to 90. Among surveyed population, 32% of people are between 60-65 age
groups. And 64% people are above 60 years of age.
According to a survey report, In India, statistics show that number of elderly as a
proportion of population will show a 107% growth, from 113 million in 2016 and 179
million by 2026 respectively.
Interpretation:
This implies the target population will increase in the near future. And India will get
elderly educated people by another 10 years.
4.2 Gender of Respondents:
T5: The Table showing Gender of respondents
Gender Respondents
Male 63
Female 37
C2: The Chart showing Gender of respondents
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Gender and Age group
T6: The table showing Gender to age group of respondents
Gender / Age < 50 50-60 60-65 65-70 >70
group
Male 7 13 23 15 5
Female 3 13 9 11 1
C3: The chart showing Gender to age group of respondents
4.3 Qualification of Respondents:
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T7: The table showing Qualification of Respondents
Qualification Respondents
Uneducated 7
Less than PUC 14
Graduate 34
P.G. 25
Professional courses 12
Others 8
C4: The chart showing Qualification of respondents
Analysis:
As the data indicates, more than 75% of the respondents are well educated. Their
qualifications are above graduation level.
Interpretation:
This show, the education level of Bangalore’s elder people is good. This helps to make
them aware of Reverse mortgage
4.4 Number of Dependents in the Family:
T8: The table showing Dependent in family of respondents
Number Dependents Respondents
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0 0
1-2 33
2-4 25
4-6 18
6-8 12
>8 12
C5: The chart showing Dependent in family of respondents
Analysis and Interpretation
The survey shows that, the elderly people are having the dependents one or the other way.
According to the survey, 43% of people have 1 or 2 dependents in the family.
4.5 Gender and Dependents
C6: The chart showing Dependent in family of respondents to gender
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Analysis:
From the graph, it is clear that about 43% people are having 1 or 2 dependents in their
family. The first dependent always will be their spouse.
Interpretation:
This implies, an elder person is having at least 1 dependent in the family. Especially in
the countries like India, they will be more sentimental towards their dependents.
4.6 Present Status:
T9: The table showing working status of respondents
Retired 65
Not Retired 35
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4.7 Occupation:
T10: The table showing occupation of respondents
Occupation Respondents
Business 12
Govt Employee 20
Pvt. Company Employee 13
Self-employed 5
Profession 15
House wife 16
Unemployed 4
Retired 10
Others 5
4.8 Income per annum:
T11: Table showing Income level of Respondents
Income per annum Respondents
Below 2,40,000 45
2,40,001 – 5,00,000 27
5,00,001– 10,00,000 18
10,00,001 and above 10
C7: Chart showing Income distribution of respondents
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Analysis:
From the graph, about 45% people are below 2,40,000 income per annum. And 27%
people have 2,40,000 to 5,00,000 income per annum. Combing both, the majority are
below 5,00,000 income group.
Interpretation:
This implies the income level of elderly is evenly distributed.
Which would be your preferred investment instrument?
T12: The table showing investment preferences on respondents
Instrument Responses
Bank deposits 62
Insurance 52
Mutual funds 25
Stock market 20
Others 5
Analysis:
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Majority of the aged people want to invest in either Bank deposits or Insurance because
of Security on their investments.
Interpretation:
This shows, aged people are risk averse persons. They do not want to take high risk. As
reverse mortgage has low risk, this financial service will be widely accepted.
4.9 Do you own House/Houses?
T13: The table showing number of respondents having at least one house
Options Responses
Yes 79
No 21
C8: The chart showing number of respondents having at least one house
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Analysis:
About 84% people have their own house. Among them most of them are having more
than one houses.
This shows most of the elderly people are house owner.
Interpretation:
As the target clients for reverse mortgage are elderly house owners, this data clearly give
the idea that reverse mortgage has potential market in India.
4.10 Are you using Reverse Mortgage facility?
T14: The table showing users and non-users of Reverse mortgage
Options Responses
Yes 6
No 94
C9: The chart showing users and non-users of Reverse mortgage
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Analysis:
Out of 100, around 94 people are not using Reverse mortgage product. Only 6 people are
using the service from various institutions like Dewan Corporation, State Bank of India,
Punjab national bank, Canara bank.
Interpretation:
This chart shows that, the reverse mortgage market is an untapped area. There is a huge
opportunity for financial institutional to offer this service.
4.11 Are you aware of the fact that, Reverse Mortgage gives the
Financial support in your Second Innings of life?
T15: The table showing awareness level on Reverse Mortgage
Options Responses
Yes 34
No 66
C10: The chart showing awareness level on Reverse Mortgage
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Analysis:
The data clearly indicates, only 34 members are aware of reverse mortgage service.
Majority of them are unaware of the services. Among 34 members, only 6 members are
using the service.
Interpretation:
From this, we can interpret that the elderly people are not much aware of reverse
mortgage service. If the financial institutions make them aware, the elderly can avail the
service.
4.12 Do you think financial advice is needed in the old age?
C11: The chart showing financial advice requirement
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Analysis:
About 88% people feel there is a need of financial advice at their old age.
Interpretation:
Financial advice should be given to the elder people at their old age about the various
services which helps them.
4.13 Parents spend money on their children; think it as an Investment
for future: T16:The table showing responses
Strongly Agree 35
Agree 25
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Disagree 22
Strongly Disagree 18
C12: The chart showing Responses for questions
Analysis:
This data indicates, Parents spend money on their children; do not think it as an
investment for future.
Interpretation:
This implies people are very sentimental towards their children. They do not expect return
on their spending to their children. This proves that people saves for their children.
4.14 The aged people feel insecure about their future:
T17: The table showing responses for questions
Strongly Agree 52
Agree 28
Disagree 12
Strongly Disagree 8
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C13: The Chart showing the responses
Analysis:
Most elderly people feel insecure about their future.
Interpretation:
As, everybody knows, future is uncertain. But for elderly people, future is uncertainty of
insecurity. So they are very careful in taking any decision about their future.
4.15 The aged people want to live with their children in their old age:
T18: The table showing Reponses for question:
Strongly Agree 49
Agree 30
Disagree 18
Strongly Disagree 3
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C14: The chart showing the responses
Analysis:
It is true in reality that, aged people want to live with their children in their old age.
Interpretation:
People are very much depending on their children. This shows that, people never want to
give their home to financial institutions; they want to give it to their children.
4.16 The young people want to keep their aged parents with them
throughout the life:
T19: The table showing responses
Strongly Agree 29
Agree 22
Disagree 30
Strongly Disagree 19
C15: The chart showing the number of responses
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Analysis:
Most of the people feel that young people do not want to keep their aged parents with
them.
Interpretation:
This indicates there is a possibility of growth in reverse mortgage in India.
4.17 The people have more sentiment on their house:
T20: The table showing Reponses
Strongly Agree 64
Agree 24
Disagree 12
Strongly Disagree 00
C16: The chart showing the Reponses
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Analysis
Majority of the people say that they are more sentiment towards their house
Interpretation
Indians are more sentimental about their family and property
4.18 The property should move from aged people to their next
generation:
T21: The Table showing the Reponses
Strongly Agree 64
Agree 24
Disagree 12
Strongly Disagree 00
Analysis:
Around 88% of people have more sentiment on their house.
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Interpretation:
People in India are very much sentimental towards their homes. This shows that, they
need their homes to be transferred from the parents to their children.
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4.19 Today, aged people are running a happy life in the world:
T22: The Table showing the Reponses
Strongly Agree 7
Agree 19
Disagree 36
Strongly Disagree 38
C17: The chart showing the Reponses
Analysis:
This shows that, people feel that elder people are not leading the happier life.
Interpretation:
This is true in the real sense that, aged people are leading miserable life in India. So it is
very much needed to help elders in providing various information about tax planning and
so on.
4.20 Comparing “Forward” & Reverse Mortgages
T23: Table indicates comparison of Forward and Reverse mortgage
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"Forward" Mortgage Reverse Mortgage
Purpose of loan to purchase a home to get cash from your home
Before closing,no equity in the home a lot of equity in the home
borrower has
At closing, borrower owes a lot, and owes very little,
has little equity and has a lot of equity
During the loan,Makes monthly receives payments from the lender
borrower payments to the lender
loan balance goes down loan balance rises
equity grows equity declines
At end of loan,owes nothing owes substantial amount
borrower
has substantial equity has much less, little, or no equity
Type of Loan Falling Debt, Rising Rising Debt, Falling Equity
Equity
4.22 Analysis of the population
T24: Dynamics of Population Aging in the Modern World
Observed and Forecasted Percentages of the Elderly (65+ years) in Selected Areas,
Regions, and Countries of the World: 1950, 2000 and 2050.
Country 1950 2000 2050
World 5.2% 6.9% 19.3%
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Africa 3.2% 3.3% 6.9%
Latin America 3.7% 5.4% 16.9%
China 4.5% 6.9% 22.7%
India 3.3% 5.0% 14.8%
Japan 4.9% 17.2% 36.4%
Europe 8.2% 14.7% 29.2%
Italy 8.3% 18.1% 35.9%
Germany 9.7% 16.4% 31.0%
Sweden 10.3% 17.4% 30.4%
U.S.A. 8.3% 12.3% 21.1%
Source: United Nations 2001.
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T25: State-wise percentage of population in age group 60 years and above.
States Total Rural Urban
Total Males Females Total Males Females Total Males Females
Andra 7.6 6.9 8.3 8.0 7.2 8.8 6.4 5.9 7.0
Pradesh
Assam 5.2 5.2 5.1 5.1 5.1 5.0 5.9 5.9 6.0
Bihar 6.4 6.3 6.6 6.5 6.4 6.6 6.0 5.8 6.3
Gujarath 7.4 6.4 8.3 8.0 7.1 9.0 6.0 5.2 6.9
Haryana 6.9 6.4 7.5 7.2 6.7 7.8 5.8 5.1 6.6
Himachal 9.3 9.5 9.0 9.5 9.8 9.2 7.0 6.9 7.0
Pradesh
Karnataka 7.4 6.8 7.9 7.6 7.0 8.2 6.9 6.5 7.4
Kerala 10.0 9.3 10.6 10.0 9.4 10.6 9.9 9.0 10.7
Madhya 6.4 5.9 6.9 6.5 5.9 7.0 6.0 5.5 6.6
Pradesh
Maharashtra 8.1 7.4 8.9 8.9 8.1 9.6 6.9 6.3 7.7
Orissa 7.7 7.4 8.0 7.9 7.6 8.2 6.0 5.7 6.4
Punjab 8.5 8.2 8.8 8.8 8.5 9.2 7.4 7.1 7.9
Rajasthan 6.4 5.7 7.2 6.5 5.8 7.3 6.1 5.3 7.0
Tamilnadu 8.5 8.2 8.8 8.8 8.5 9.1 7.9 7.6 8.2
Uttar 6.8 6.5 7.2 7.1 6.7 7.4 5.7 5.4 6.0
Pradesh
West Bengal 6.7 6.3 7.2 6.2 5.7 6.7 8.2 7.8 8.7
India 7.1 6.7 7.6 7.3 6.8 7.7 6.6 6.2 7.1
Source: Sample registration system Statistical Report 2002, Registrar General of India
T 26: Age Group-wise Distribution of population by Sex and Residence- 2002
Age Total Rural Urban
Group Total Males Females Total Males Females Total Males Females
60-64 2.4 2.3 2.5 2.4 2.3 2.5 2.4 2.3 2.4
65-69 2.1 1.9 2.2 2.1 2.0 2.3 1.9 1.7 2.0
70-74 1.3 1.2 1.4 1.3 1.3 1.4 1.2 1.1 1.3
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75-79 0.8 0.7 0.9 0.8 0.8 0.9 0.7 0.6 0.7
80-84 1.4 0.3 0.4 0.4 0.3 0.4 0.3 0.3 0.4
85+ 0.2 0.2 0.2 0.2 0.2 0.3 0.2 0.2 0.2
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: Sample registration system Statistical Report 2002, Registrar General of India
T 27: Projected Population by Age group for 2025 and 2050
Age Projected population in 20025 Projected population in 2050
Group Total Males Females Total Males Females
60-64 93170 46299 46871 55601 27671 27930
65-69 78519 38165 40354 43698 21407 22291
70-74 59416 28035 31381 30799 14714 16085
75-79 45663 20731 24932 19457 8822 10635
80-84 29550 12803 16747 11050 4753 6296
85-89 15502 6353 9149 5225 2170 3056
90-94 6081 2339 3742 1833 748 1085
95-99 1545 552 993 421 170 250
100+ 238 78 160 62 25 37
Source: Population Division of the Department of Economics and Social Affairs of the
United Nations Secretariat, World population prospects: The 2004
Analysis:
Though the Indian population is still comparatively ‘young’, India is also ‘ageing’. Some
demographic projections for India indicate that
The number of elderly (>60 yrs) will increase to 113 million by 2016, 179
million by 2026, and 218 million by 2030. Their share in the total population
is projected to be 8.9 % by 2016 and 13.3% by 2026. The dependency ratio is
projected to rise from 15% as of now to about 40% in the next four decades
The percentage of >60 in the population of Tamil Nadu and Kerala will reach
about 15% by 2020 itself!
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Life expectancy at age 60, which is around 17 yrs now, will increase to
around 20 by 2020
As per a survey of the National Sample Survey Organization (NSSO) in 1994, less than
4% of the elderly lived alone. A 1995-96 National Sample Survey of the elderly reported
that about 5% of them lived alone, another 10% lived with their spouses only and another
5% lived with relatives/ non-relatives, other than their own children. In other words, co-
residence with children and other relatives is predominant.
However, the following aspects are worrisome:
The extent and adequacy of support, especially for widows
Vulnerability of such support to shocks to family income
As incomes and life expectancy rose in the now developed countries,
simultaneously there was a decline in co-residence rates and intergenerational
support. It may happen in India too
Strains due to demographic trends seem inevitable: fewer children must support
parents for longer periods of time. In a recent survey covering 30 cities, 70% of
the respondents did not expect their children to take care of them after retirement.
Job related migration of youth within the country and emigration.
Findings, Suggestions and Recommendations
Findings
As of February, 2008 as many as 150 reverse mortgage loans were availed of by the
senior citizens of the country. This information was furnished by the NHB or the National
Housing Bank. A reverse mortgage loan program is more widely practiced in the Western
countries. However, studies and reports reveal that reverse mortgage in India has still not
been able to struck roots. The main reason for the failure may be attributed to the fact that
there had been a lot of confusion regarding the concept of taxation related to reverse
mortgage in India.
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5.1 Indian Market Potential
India-specific Characteristics of Relevance to Reverse Mortgage
There are no universal old age social security related benefits. Only about
10% of the active working population are covered by formal schemes. This
would substantially enlarge the potential target market for reverse mortgage:
‘house-rich, cash-poor’.
A much lower proportion of urban households, and by implication, less scope
for reverse mortgage.
A much larger proportion of elders co-living with their family members of
subsequent generations and hence less scope for Reverse mortgage
A possibly stronger bequeath motive, reducing the scope for Reverse
mortgage.
A possibly higher real rate of appreciation of real estate and housing prices,
making Reverse mortgage more attractive to the lender.
Widespread under valuation of real estate properties to accommodate
transactions involving unaccounted money and evasion of taxes on property
and real estate transactions
Complexity, variety and location specific variations in types of home
ownership.
a. Benami holdings/ ‘Irrevocable power of attorney’
b. Leasehold/ freehold
c. Land use conversion regulations
d. Floor space regulations
e. Rent/ tenancy controls
f. Disposal of ancestral property
Absence of competitive suppliers for immediate life annuity products. This, in
turn, is a consequence of
· Lack of data on old age mortality rates
· Lack of long-term treasury securities for managing interest rate risks of
annuity providers
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The fledgling nature of the secondary markets for mortgage and securitization of
mortgage loans
India specific legal and taxation issues
· License/ Permission required under insurance/ banking regulation for
offering Reverse mortgage
· Income tax treatment for Reverse mortgage lender and borrower
· Capital gains on property
· Reporting and provisioning by the lender as per banking/ insurance
regulation
· Seniority of Reverse mortgage claims vis-à-vis other secured lenders
· Status of Reverse mortgage loan in case of insolvency
5.2 Potential Market Segments
Age Group
Above 58 years, assuming 58 is the typical retirement age. Older the individual, more attractive
will be Reverse mortgage. Additional considerations will include the minimum age specified for
preferential treatment as ‘senior citizens’ in matters such as income tax or the recently introduced
Varishta Bima Yojana.
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Long Tenure at Current Home
Reverse mortgage is attractive to a borrower especially when he values continued stay in
his current residence and plans to do so for a long term into the future. This is likely when
he has already stayed in his current home for a relatively longer period- say a minimum of
10 years. Additional indicators for such a desire could be a person currently resident in
one’s home town/ state.
Low Current Incomes Relative to Desired Standard of Living
Amongst such households, we are looking for those whose current levels of income are
insufficient to afford their desired standard of living. The salary replacement rates
suggested in the literature, for maintaining the same standard of living after retirement as
before, is around 60%. This implies a pre-retirement take home salary or income (after-
tax) of around Rs 9000-10000 a month. A potential Reverse mortgage borrower would be
one who had such a pre-retirement income but no substantial pension benefits. Therefore,
he would have been employed in the private sector or self-employed
Lack of Other Supports
If such an individual is living alone, as in the case of a widower or widow, Reverse
mortgage can make a substantial contribution to his/ her standard of living. Alternatively,
the next generation may be living far away, either in India or abroad.
No Significant Bequeath Motive
Literature suggests that there is a basic conflict between taking an Reverse mortgage loan
and a desire to bequeath property to one’s heirs. If an elderly homeowner has no children,
this question may not arise. Otherwise, we need to look for attributes indicating a weak
bequeath motive. For example, in the Indian context, it could mean ‘no sons’. Or it could
be that the entire next generation of the family has migrated to another metro or abroad
with no intention of coming back. They may be much better off than the older generation
and may not value bequests, if any.
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Independence and Quality of Life
A potential Reverse mortgage borrower must be an elderly person who values his financial
independence. He must be interested in maintaining his desired quality of life rather than
curtailing consumption for lack of current cash income. This implies he must be mentally
prepared to consider borrowing in old age, let alone through innovative financial products like
Reverse mortgage. This implies certain minimum education and exposure to financial savings/
assets/ markets.
5.3 Sources of Indian Data Relevant to Reverse mortgage
It is very obvious that the target segment for reverse mortgage is very atypical- ‘the
generation past’ rather than the much discussed ‘generation next’. Therefore it is not
surprising not much data of specific relevance to reverse mortgage is available. Basically
we need information on the following: characteristics of households primarily of the
elderly- age profile, current market value of the house, current monthly incomes and
expenditures (including health care), other financial assets and sources of support, desires
for bequests and so on. We also need reliable projections on mortality rates among the
elderly, appreciation rates in property values in the long run, long-term interest rates etc.
5.4 Housing Stock Owned and Occupied by the Elderly
The Census of 2001 has published a lot of data on housing conditions.
No valuation of house property has been attempted. Houses have been classified as
‘Good’, ‘Liveable’ or ‘Dilapidated’; ‘owned’ or ‘rented’; size in terms of number of
rooms; urban/ rural etc.
Even though data on the age of the head of the household has been reportedly
collected, such tables have not been published yet.
There are many other recent surveys, namely the National Family Health Survey (NFHS-
2) conducted in 1998-99, involving a large national sample of almost 92000 households.
This survey’s focus was on the family health status, especially of women and children.
However, according to this survey,
The age of the head of the household was 60+ in 19.2% (22.4%) of the urban
(rural) households.
About 12% of men and 43% of women above 50 were widowed.
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Unfortunately, this survey does not provide any information on type of home ownership,
value of houses etc.
The latest published study on the elderly in India is by researchers from the Centre for
Development Studies.
Projections in this study, based on census data till 1991, indicate that urban
areas in the states of Kerala, Tamil Nadu, Goa and the union territory of
Chandigarh may provide the maximum immediate potential for Reverse
mortgage. This is based on proportion of elderly and literacy levels.
This study also projects the population of ‘old-old’, i.e., above 70 yrs, the
prime target for a Reverse mortgage loan.
As reported in this study, the findings of an all India survey of the elderly
conducted by the NSSO in 1986-87 amongst 50000 households are as follows:
a. Amongst the elderly, about 9.52% (12.43%) males and 0.8% (1.43%)
females in urban (rural) areas lived alone.
b. Amongst the elderly, only about 0.70% (0.82%) males and 0.48% (0.63%)
females in urban (rural) areas owned any property.
As a part of this study, a special “Ageing Survey” was conducted amongst
2253 persons above 60, in the four states of Kerala, Tamil Nadu,
Karnataka and Orissa. The reported findings of relevance to Reverse
mortgage are as follows:
c. There is a striking difference in widowhood across elderly males and
females: 14% amongst males and 68% in females.
d. About 14% of the elderly live in single member or two-member
households.
e. Amongst the elderly, around 90% of the males and 37% of females, were
‘designated’ as head of the household
f. Amongst the elderly designated as heads of households, about 70% of
males and 50% of females actually had ownership of the house.
g. The findings on health status are as follows:
As per self assessment, 8.7% of males and 10.6% of females said
they are ‘unhealthy’
About 35% of both males and females reported some ‘perennial’
health problem. As many as 50% of males and 59% of females
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