The reverse mortgage market might not get an immediate boost through the newly launched National Housing Bank (NHB) product, which provides life-long annuity payment to the homeowner who pledges the property with the lenders, unless it is backed by a mindset change among Indians and proper marketing efforts, bankers say.

Lenders say reverse mor-tgage as a product needs to be marketed properly to be attractive to the Indian psyche that is generally not amenable to pledging ownership papers to banks. “The product has not picked up during the past two years because generally Indians want to pass on their properties to their offspring and not give it back to the bank once they are old,” H Rathnakara Hegde, executive director, Oriental Bank of Commerce, told Financial Chronicle.

Hegde said there has to be concerted effort to market the product so that senior citizens understand its utility. “Reverse mortgage could have a huge potential in India. However, one needs to explain its benefits to the people,” he said.

An official of Punjab National Bank, dealing with the bank’s reverse mortgage product, agreed that banks have not made enough efforts to sell the product. “The product has not picked up much because banks have not marketed it. There have been no advertisements explaining the benefits of entering into a reverse mortgage deal,” the official said.

The official said banks are apprehensive of getting involved in legal hassles while selling the property in case they end up taking possession if no one is willing to repossess the house after paying the dues after the death of the owner.

The new NHB product, which has been developed in association with Star Union Dai-chi Life Insurance, allows for lifelong payment of annuities to the homeowner instead of the cap of 20 years in older products. The first reverse mortgage product, which has been in existence for two years, has managed to garner total business of around Rs 700 crore. The deal involves a homeowner pledging the property to the lender in exchange of either a lump-sum payment or a steady income spread over a period of time.

In contrast, experts dealing with old-age income security say the reverse mortgage market could be a goldmine for lenders. “Our estimate is that the total market value of 100 per cent-owned homes of people reaching retirement age could be valued at around Rs 17 lakh crore. Any lending institution should be keen to tap such a huge market,” Gautam Bhardwaj, director, India Invest Economic Foundation (IIEF), an adviser to the government on pension reform, said. IIEF study showed that nearly 52 million employed people are at present between 51-60 years of age and accounted for 17-18 per cent of the total workforce. Out of this, 36 million people have 100 per cent ownership of their homes, Bhardwaj said.

He said the new NHB product could help shake up the dormant market. “If one provides lifelong annuity, it can become a vibrant market provided someone is interested in selling the product. Effort needs to be made to motivate people to buy the product,” he said.”

R V Verma, executive director, NHB, said the reverse mortgage market could get a boost from the new product. “We can expect to see an incremental growth in reverse mortgage deals after the launch of our new product. The 20-year cap on payments was definitely a hindrance,” he said.

(With inputs from Abhishek Anand)