Senior citizens plann­ing to enter into a reverse-mo­rtgage deal with banks for their home can now get re­gular monthly payments till death, instead of the earlier 20-year cap on pa­yments fr­om the time of entering into the arran­gement with the lender.

The National Housing Ba­nk (NHB) has drawn up a new scheme in collabor­ation with Star Union Dai-chi Life Insurance Compa­ny (SUD Insurance) to pr­ovide the life-long annuity facility.

The scheme, which has been cleared by NHB board and will be notified soon, NHB, chairman and ma­naging director S Srid­har said while announcing the annual results of NHB.

Sridhar said the Insura­nce Regulatory and Devel­opment Authority (Irda) has already given its appr­oval to the new reverse-mo­rtgage product. “Banks will now have to come up with their product either with an arrangement with SUD Insurance or with any ot­her insurance co­mpany th­at comes up with a similar product after getting the necessary regu­latory appro­val,” Sridhar said.

Reverse-mortgage invol­ves a deal where the owner of a residential unit ple­dges the property to the lender in exchange of mo­nthly an­nuity payment. The bank takes possession of the pr­operty after the death of the owner or it may be taken over by the person inheriting the prop­erty aft­er making the agr­eed pay­ment to the bank.

“There were several representations on behalf of senior citizens that the 20-year cap on payment on annuities was unjust since the requirement of money is more when they grow older. The new scheme not only allows for annuity payment till death but also because it is an arrangem­ent with an insurer the mo­nthly payment would be hi­gher than the earlier sche­me,” Sridhar said.

Under the earlier sche­me, if a person entered into a reverse-mortgage with a bank for his or her property at the age of 60, the an­nuity payment wo­uld stop at 80 though the person would be allowed to live in the house till death.

Sridhar said the higher payout has been made po­ssible because ins­urers go by the mortality ch­arts to determine annu­ity where­as the banks (wh­ich were making the paym­ent under the earlier sche­me) arrive at the payout th­rough discounting the pro­­perty value at specified rate.

“The customer will co­ntinue to deal only with the bank with which the deal has been entered wi­th. Ho­wever, there will be a back-to-back arran­gement betw­een the bank and the in­surer under which the ba­nk will pay premium to the insurance company,” Srid­har said.

NHB’s operating profit has gone up by 31 per cent to Rs 354 crore for the financial year ending June 30, 2009 while its net profit rose by 39 per cent to Rs 236 crore.

The apex bank for housing finance reco­rded 18 per cent higher sa­nctions at Rs 15,728 crore while disbursements went up by 21 per cent to Rs 10,889 crore.

Now seeing more inter­est in public for housing especially the affordable se­­gment of around 20 lakhs

Commenting on inter­est rates, Sridhar said the mo­vement of rates would dep­end on the demand for cre­dit. “Interest rates mi­ght not go up immediately bec­ause of adequate liqui­dity in the market. How­ever, going forward if credit de­mand picks there could be upward movement in in­terest rates,” he said.

He also informed that National Housing Ba­nk has submitted a rep­ort to the government on establi­shing a Central Ele­ctronic Registry for prope­rty.

The Credit Informat­ion Bureau of India (Cibil) will be hosting the electr­onic database which will have data on loans as well as physical details of the property. This will help in checking frauds leading to multiple financing of same property,” Sridhar said.