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Monday, March 24, 2008

Union Bank of India set to launch reverse mortgage scheme by April

Following the budget announcement that income received on reverse mortgage would not be taxed, public-sector lender Union Bank of India plans to launch its reverse mortgage product by next month.

"The product is ready with the bank. The budget has cleared all the tax matters related to the product (reverse mortgage). We plan to launch the product by next month," UBI Chairman and Managing Director M V Nair told PTI.

Many lenders such as State Bank of India, Canara Bank, Punjab National Bank, Uco Bank, Bank of Baroda, Allahabad Bank, Indian Bank, Axis Bank and Central Bank of India are already offering the product to senior citizens.

Announcing the budget, Finance Minister P Chidambaram had said that the income tax act would be amended to provide that reverse mortgage would not amount to 'transfer' and the income received by senior citizens would not be taxed as 'income'.

Reverse Mortgage is a scheme meant to provide a monthly income for senior citizens, who own self-acquired and self-occupied house property, by mortgaging the property to the bank.

The customer does not have to repay the amount during his/her lifetime and can enjoy the stay in the house with the spouse through his/her lifetime.

After the death of the borrower, the legal heirs can either surrender the property to the bank or can repay the loan to redeem the property.

UBI, which is currently implementing an aggressive expansion programme, had recently rolled out a bouquet of products to its customers such as SMS Banking, Online Trading Service besides bringing nearly 2,100 branches under the Core Banking Solution (CBS).


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