Ethnical upshots on senior citizen finance in India - An empirical study on reverse Mortgage- need and challenges
Journal Title: International Journal of Physical and Social Sciences (IJPSS) - Year 2012, Vol 2, Issue 2
Abstract
During the last one decade there has been significant demographic change in India's population due to globalization and improved medical facility and lifestyle. The fall of joint family system and rise in nuclear family system has brought new dimension to the care and welfare of Elderly. The population of aged people above 60 yrs as on 2009 is estimated at 90 million, i.e. around 8% of total population. According to UN the population of 60+ in 2050 will be around 20%. Life expectancy has increased 60% in last 60 years from 42 yrs in 1950 to 69yrs in 2009. This paper examines the pros and cons of reverse mortgage scheme and need of such scheme in Indian society and challenges in the implementation of such senior citizen finance schemes in India. A large part of the savings of Senior Citizens is tied up in non-liquid assets such as homes and property. Senior Citizens usually do not have a regular income and if they exhaust their savings, then it gets difficult to meet living expenses without having to sell their house. A reverse mortgage allows a senior citizen who owns a house to avail of a monthly stream of income against mortgage of the house. The senior citizen remains the owner and occupies the house throughout his or her lifetime, without repayment or servicing of the loan. This system allows Senior Citizens to convert their homes into cash without having to sell their property. The monthly amount paid by the reverse mortgage company can be used to meet medical expenses, pay utility bills and so on. The borrower does not need to repay the loan as long as he/she continues to live in the house. This scheme is becoming popular in recent years in india. But as per the RBI report it is not well accepted in India due to the family system that we follow. 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 Indian banking industry must not complicate the scheme as it has done.
Authors and Affiliations
Prof. Suresha B, Dr. Gajendra Naidu
Keywords
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