Executive summary

In general, all types of activities which are of a financial nature

could be brought under the term financial services. The term Financial
Services in broad sense means mobilizing & allocating savings. Thus, it
includes all activities involved in the transformation of saving into investment.
The financial service can also called financial intermediation. A well
developed financial services industry is absolutely necessary to mobiles the
savings & to allocate them to various investable channels & thereby to
promote industrial development in a country.
Banks provides various financial services to all levels of customers. In
order to provide services to all level of customer, bank also started providing
services to senior citizens. In today’s scenario banks not only limited only
particular boundaries of nation, thank to globalization & liberalization. It
provides various benefits to the county by mobilizing transfer of funds,
liberalization of interest rates of bans etc.
Senior citizens are also the part of the economy. They are most valuable
customers, so that due care should be taken by banks in order to provide
services to them. Banks should be find out the needs of them & accordingly
provides services.
In India, the literacy rate is very low, it also includes senior citizens. In
order to aware the senior citizens about the schemes necessary steps should be
taken by banks. If they can aware about such facilities, they can avail various
services provided by banks.
In this project provides detail information about various schemes which
are available to senior citizens & how it is beneficiary to them.

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 Introduction
The most common cause of fear of old age is associated with the possibility of
poverty.
- Napoleon Hill.
Death is not the biggest fear we have; our biggest fear is the risk to be alive- the
risk to be alive & express what we really are.
-Don Miguel Ruiz.
Man fear for three things in life. They are fear of sickness; fear of
dependence & the fear of old age. Old age does not come all alone. It brings so
many other problems & fears along with it. The old age is more prone to the
above risks & the risk bearing capacity becomes almost zero during the
advancing age. Throughout the life of a man, food, clothing & shelter remain
three basic necessities & they never lose significance or priority. Between the
first & the last breath, a man struggles for getting these three things for himself
& his family.
Banks provides various services to all categories of the customers.
There are various products/ services to the citizens. Separate schemes available
for women, children etc. In order to diversify the activities to all level of
customers, banks also provides different facilities to the senior citizens.
In 2000, Indian population was 1014 (in millions) whereas in 2030 it will
be 1437(in millions). In 2030, 9% of India’s population, or nearly 130 million
people, will be over 65 years of age.

Year 2000 2030

Population over 65 years (%) 4.6 9.0

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 Banks provides various facilities to senior citizens. It includes various
schemes such as deposit, loan schemes, Reverse mortgage loan, senior citizens
savings schemes, 2004 etc. which are beneficiary to senior citizens.

Objective
• To know about the banking products/ services for senior citizens.
• To understand, how it is beneficiary to senior citizens.
• To find out if they are aware about such banking products/ services.

Research & Methodology

Direct information from Assistant Manager, Special assistant of State

Bank of India & Officer of Canara Bank provides answers of questionnaire.
From such useful information, analysis has been done.

For the customer survey, question asked & accordingly analysis have
been done.

Facilities provided available to the senior citizens

• Senior Citizens Savings Account, 2004

• Reverse Mortgage Loan

• Senior citizens account (HDFC BANK)

• United Personal Loan Schemes for Pensioners (UCO BANK)

• United Housing Loan Scheme for Pensioners (UCO BANK)

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 • Deposit schemes

• Loan to pensioner

Senior Citizens Savings Scheme, 2004

Government of India had launched the Senior Citizens Savings Scheme, 2004
(SCSS) with attractive interest rate exclusively for the benefit of senior citizens,
with effect from August 2, 2004. Senior Citizens Savings Scheme accounts can be
opened with Post Offices and Agency banks.
The salient features of the Senior Citizens Savings Scheme, 2004 are:
Tenure of the scheme 5 years which can be extended by 3
more years
Rate of interest 9 per cent per annum
Frequency of computing interest Quarterly
Taxability interest is fully taxable
Whether TDS is applicable Yes, Tax will be deducted at source
Minimum investment limit Rs. 1000/-
Maximum investment limit Rs. 15 lakh
Minimum eligible age for investment 60 years (55 years for those who have
retired on superannuation or under a
voluntary or special voluntary scheme).
The retired personnel of Defence
Services (excluding Civilian Defence
Employees) shall be eligible to invest
irrespective of the age limits subject to
the fulfillment of other specified
conditions

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Premature withdrawal facility Available after one year of holding but
with penalty
Transferability feature Not transferable to others
Tradability Not tradable
Nomination facility Nomination facility is available
Modes of holding Accounts can be held both in single and
joint holding modes. Joint holding is
allowed but only with spouse

Features of Senior Citizens Savings Schemes:

• Eligibility
a) An individual who has attained the age of 60 years and above on
the date of opening of an account , or on whose behalf, money is
deposited in an account under these rules, or
b) Who has attained the age of 55 years or more but less than 60 years,
and who has retired on superannuation or under a voluntary or
special voluntary scheme or otherwise on the date of opening of an
account under these rules.
c) The retired personnel of Defence Services (excluding civilian
Defence employees) irrespective of the above age limits subject to
fulfillment of other specified conditions. (The Senior Citizens
Savings Scheme (Amendment) Rules, 2004 notified on October 27,
2004).
• Investment
The deposits can be made only in the multiples of Rs. 1,000 and the
maximum limit for a deposit has been restricted to Rs. 15,00,000. One
important condition is that if a person opens multiple accounts for making

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 more than one deposits, the total amount of all the deposits should not cross
the maximum limit of Rs. 15,00,000.

• Interest on Deposit
The deposit made under these rules shall bear interest @ 9 % p.a. from the
date of deposit payable at the end of each calendar quarter e.g. 31st March /
30th June / 30th September / 31st December.
• Tenure of the scheme
While maturity period will not be less than five years, it can be extended by a
further period of three years by an application within one year of maturity.
Even if there is no application, such extension will be presumed and deposit
continued.
• Transferability feature
Not transferable to others.
• Tradability
Not tradable.
• Closure of account
a) The deposit made at the time of opening of account shall be paid
by the deposit office at which the account stands to the depositor
on or after expiry of five years from the date of the opening of the
account on production of the pass book accompanied by a written
application (withdrawal form) in FORM-E.
b) In case the depositor does not close the account on maturity as
specified under sub-rule (1), and also does not extend the account
under rule 4(3), the account shall be treated as matured and the
depositor will be entitled to close the account at any time subject to

6
 the condition that post maturity interest as prescribed under rule
7(9), shall only be admissible for the period beyond maturity.
c) In case of death of a depositor before maturity, the account shall be
closed and deposit refunded on an application in FORM-F, along
with interest till the end of the month preceding the month in
which refund is made, to the nominee or legal heirs in case the
nominee has also expired or nomination, as provided in rule 6, was
not made, as the case may be:
Provided that in case of a joint account, or where the spouse is the sole
nominee, the spouse may continue the account on the same terms and
conditions as specified under these rules:
 Provided further that in case the spouse does not continue the
joint account, the account shall be closed on an application in
FORM-F and the deposit refunded along with interest as above.
 Provided also that where both the spouses have opened separate
accounts under the scheme, and either of the spouses dies during
the currency of the account(s) under the scheme, the account(s)
standing in the name of the deceased depositor/spouse shall not be
continued in accordance with the first provision and such accounts
shall be closed.
d) Where there is no nomination in force at the time of death of the
depositor, the amount standing to the credit of the deceased
depositor shall be paid by the deposit office to the legal heirs of the
deceased depositor on receipt of an application in FORM-F along
with a certificate of death of the depositor and a succession
certificate or Letter of Administration with attested copy of

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 probated will of the deceased depositor issued under the provisions
of the Indian Succession Act, 1925 (39 of 1925).
 Provided that the total amount including interest, payable up to rupees
one lakh may be paid to the legal heirs on production of (i) a letter of
indemnity, (ii) an affidavit, (iii) a letter of disclaimer on affidavit, and
(iv) a certificate of death of the depositor on stamped paper, in the
forms as in Annexure to Form-F.
e) No deduction, as specified under rule 9, shall be made in case of
premature closure of an account at any time due to death of a depositor.
• Premature withdrawal facility
Notwithstanding anything contained in sub-rule (2) of rule 4, on an
application in FORM-E, in this regard, the depositor may be permitted to
withdraw the deposit and close the account at any time after the expiry of one
year from the date of opening of the account subject to the following
conditions, namely:-
 In case the account is closed after the expiry of one year but
before the expiry of two years from the date of opening of the
account, an amount equal to one and a half per cent of the deposit
shall be deducted and the balance paid to the depositor.
 In case the account is closed on or after the expiry of two years
from the date of opening of the account, an amount equal to one per
cent of the deposit shall be deducted and the balance paid to the
depositor.
 The depositor availing the facility of extension of account under
Rule 4 (3) may be permitted to withdraw the deposit and close the

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 account at any time after the expiry of one year from the date of
extension of the account without any deduction.
• Nomination facility
a) The depositor may at the time of opening of the account under
these rules, nominate a person or persons who, in the event of
death of the depositor, shall be entitled to payment due on the
account [Rule 6 (1)].
b) If such nomination is not made at the time of opening of the
account, it may be made by the depositor at any time after the
opening of the account but before its closure, by an
application in FORM-C, accompanied by the pass book to the
deposit office [Rule 6 (2)].
c) The nomination made by the depositor may be cancelled or varied by a fresh
nomination in FORM-C to the deposit office where the account is being
maintained [Rule 6 (3)].
d) Nomination facility shall be available in the case of joint account also.
However, in such case, the joint holder will be the first person entitled to
receive the amount payable in the event of death of the depositor. The
nominee’s claim shall arise only after the death of both the joint holder [Rule
6 (4)].
• Transfer of account from one deposit office to another
A depositor may apply on FORM-G, enclosing the pass book thereto, for
transfer of his account from one deposit office to another in case of change of
residence. If the deposit amount is rupees one lakh or above, a transfer fee of
rupees five per lakh of deposit for the first transfer and rupees ten per lakh of
deposit for the second and subsequent transfers shall be payable.

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• Deposits by Non-Resident Indians (NRIs) and Hindu Undivided Families
(HUF)
a) The Non Resident Indians are not eligible to open an account under these
rules:
If a depositor becomes a Non-resident Indian subsequent to his opening the
account and during the currency of the account under the SCSS Rules, the
account may be allowed to continue till maturity, on a non-repatriation basis
and the account shall be marked as a Non-Resident account.
b) Hindu Undivided Family is also not eligible to open an account under
these rules.
• Mode of deposit
a) In cash, if the amount of deposit is less than rupees one lakh.
b) By cheque or demand draft drawn in favour of the depositor and endorsed
in favour of the deposit office.
• Modes of holding
a) Joint account under the SCSS, 2004 can be opened only with the spouse
[ Rule 3 (3)]
b) In case of a joint account, the age of the first applicant / depositor is the only
factor to decide the eligibility to invest under the scheme. There is no age
bar/limit for the second applicant / joint holder (i.e. spouse) [Rule 3 (3)]
c) Both the spouses can open individual and / or joint accounts with each other
with the maximum deposits up to Rs.15 lakh each, provided both are
individually eligible to invest under relevant provisions of the Rules
governing the scheme (Rules 3 and 4 ).
• Taxability
Interest is fully taxable

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• Tax Deductable at Source (TDS)
a) TDS is applicable to the scheme as interest payments have not been
exempted from deduction of tax at source.
b) Tax is to be deducted at source if the interest paid or payable exceeds
Rs.5000/- during the financial year.
c) The rate for TDS for a financial year is specified in Part II of Schedule
I of the Finance Act for that year. The prescribed rate for the financial
year 2006-2007 are as under :
In the case of a person other than a company:
 Person resident in India – 10 %
 Others – 20 %
The amount so deductible shall be enhanced by surcharge calculated as per
the following rate:
In the case of Individual, HUF, Association of Person and Body of
Individuals – 10% if the interest paid / payable exceeds Rs.1000000/-.
• Names of banks handling SCSS
At present there are 24 nationalized banks and one private sector bank &
their designated branches of these banks have been authorized to handle SCSS,
2004. The list is given below:
State Bank of India
State Bank of Hyderabad
State Bank of Indore
State Bank of Bikaner and Jaipur
State Bank of Patiala
State Bank of Saurashtra

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State Bank of Mysore
State Bank of Travancore
Allahabad Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Bank
Indian Overseas Bank
Punjab National Bank
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank
ICICI Bank Ltd.

Reverse Mortgage Loan

Reverse mortgage loan offers lifeline to the senior citizens. Finance

Ministry P Chidambaram proposed the introduction of an innovative product-

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 Reverse mortgage facility- in the union budget 2007-08 for the benefit of senior
citizens. The house property is the most valuable asset in anyone’s life. But
entire capital of an immovable property & the proud homeowners become asset-
rich & cash- poor, always finding it difficult to strike a balance between the
increasing inflation & poor cash flows.

Reverse mortgage is powerful financial tool which can be used to

overcome the elderly people’s regular financial problem. Reverse mortgage is
one of the financial products that offers regular stream of cash flows to senior
citizens to meet their monetary requirements. It bears the regular interest of 10 to
11% in India.

Reverse mortgage does not involve any transfer of property & the amount
generated through this scheme is loan & not income, hence it is not taxable.

In India, only 2000 senior citizens across the country have utilized this
scheme as it has not appealingly packaged. According to the economic
predictions, the current potential of reverse mortgage market is $ 40 bn.

Eligibility criteria
 The senior citizen should have at least 60 years of age/ if they are couples
one among them should be of 60 years of age.
 He/ she/ they should possess self occupied own house which should be
used for primary residence purpose by them.
 It should be liberated from legal burden.
 It should have enduring life of 20 years.

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End Use of Loan
There is no restriction or guidelines for the end use of loan. The borrowed
amount can be utilized for the following purposes.
 To renovate, upgrade & to extend the existing house property.
 To pay back the already obtained loan for mortgaging the residential
property.
 To meet any real & legitimate need.
 To meet medical & emergency expenses.
 To substitute the regular income/ pension.
Pros and Cons of Reverse Mortgage

The merits & demerits of a RML scheme has to understood by every senior citizen
before they enter into these arrangements as their major amounts would be invested
in the house at the time of their retirement and it is very tough to liquidate the
investment when is required for meeting any urgency.

Pros

 The senior citizen can avail the loan without transferring the ownership of the
house property.

 No repayment of loan is required as long as the senior citizen live in the

mortgaged house.

 Income generated from reverse mortgage is tax free.

 This loan is exempted from capital gain, wealth tax.

 No restriction on the usage of loan amount.

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  Interest is being charged only on the loan amount which has on the loan
amount which has been received.

 There are numerous chances for the appreciation of house value as the real
estate market is growing in India. So if the senior citizen has decided to avail
the reverse mortgage loan, he/ she is leaving a high equity to his/ her heirs.

 As there is no age limit for availing this loan, senior citizen can avail the loan
at any time. Moreover, more old people can easily avail the loan.

 The lender has right only on the home, if the loan is required to be paid off.

 The owner is allowed to value the property in the initial stage.

Cons

 Cost of loan i.e., the interest charged on the loan is very high. Future
the borrower has to incur some more cost in addition to the interest
known as closing cost such as loan processing charges, cost of
documentation & commitment charges on undrawn loan amount.

 There is a chance for the mortgage loan may eat equity in the loan.

 In India, the maximum amount of loan is restricted to a cap of Rs. 50

lakh, & a period of 15 years. So at the end of maturity period or the
death of the senior citizens whichever is earlier, the loan amount has to
be repaid with the interest amount. If any of the senior citizens outlive

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 the tenure period, through he/ she will not be asked to move out of the
home, it is considered to be very tough to dispose the house for them.

 There is no clarity regarding the terms & conditions.

 Reverse mortgage loan is not suitable for short term purposes

 The termination fee is considered to be very high, if any person

decides to repay the loan before the maturity period.

 The person who lives with the only & only one owner of the reverse
mortgage loan scheme cannot continue to live in the home after the
death of the owner.

Senior citizens account

Eligibility

 All resident individuals (sole or joint) in the age group of 60 years and above
are eligible to open the Senior Citizens Account.

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  In case of joint accounts, the first applicant has to be a senior citizen (>= 60
years of age)
Account Operation
 A minimum deposit of Rs. 5,000/- is required to open a Senior Citizens
Account and thereafter an Average Quarterly Balance (AQB) of the
same amount has to be maintained.
 Non-maintenance of required AQB will invite charges of Rs.250/- per
quarter.
 Transaction charges will be applicable in case the specified AQB has
not been maintained in the previous quarter.
Features & Benefits
 Shop with pride with your Easy Shop International Debit Card offered
free for life to the first applicant. Shop (Point of Sale limit) up to
Rs.25,000/- per day.
 Enjoy an enhanced cash withdrawal limit of Rs.25,000/- per day on the
Debit Card for withdrawals at any HDFC Bank ATM.
Note: If the first applicant is a woman and new to the bank, our special
Woman's Advantage Debit Card with ATM cash withdrawal limit
Rs.20,000/- per day and shopping (Point Of Sale) limit of Rs.30,000/- per day
will be issued free by default.
 Free cash withdrawals on any other Bank's ATM
 Payable-at-Par (PAP) cheque books are issued free. With this facility,
outstation cheques issued by you (for clearing) will be treated as local
cheques, at any HDFC Bank location.
What's more, enjoy free PAP usage up to Rs.50,000/- per month. A nominal
charge of Re.1/- per 1000 will apply above Rs.50,000/- on the full amount.

17
  Keep a close eye on your account with the monthly account statements
offered free OR
Avail of free Passbook facility at your account branch.
 Use the third party cash transaction facility at non-account branches, to
have your near and dear ones deposit / withdraw cash up to Rs.50,000/-
per day on your behalf for free. Above Rs 50,000 a charge of Rs 2.90/-
per 1000 on the full amount would be applicable.
 Use our Phone Banking, Mobile Banking and Net Banking facilities
offered free to reach us with ease.
Avail free SMS alerts to know the transactions in your account.
Free Email Statement facility and National Electronic Funds Transfer facility
available.
Special offers and benefits
 Get preferential rates on FDs
 Special offers on new Demat Accounts
 Annual Maintenance Charge (AMC) waived off for the first year
 50% AMC from second year onwards
 Dematerialization of physical shares free for lifetime
(The offer is applicable only for the 1st Demat account linked to the Senior
Citizens Savings Account)
 Special offers on new Online Trading Accounts
Account opening charges Rs.499/- only
5 trades free .Valid for the next 3 months from the date of account opening
 Gold Credit Card free
 Travellers’ Cheques issued free
Insurance Benefits

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 Get Accidental Hospitalization cover of Rs.50,000/- per annum. This is a
reimbursement cover for the first applicant.
 Senior citizens can also claim daily cash allowance* once a year (at Rs.500/-
per day for a maximum of 15 days per year) for each day of hospitalization
due to an accident.
 Senior citizens claim will be processed only if you have used your HDFC
Bank Debit Card for purchase at a Merchant Establishment at least once in
the previous 6 months from the month of your accident.

United Personal Loan Schemes (FOR PENSIONERS)

• Purpose
To provide short term loan to the pensioners to meet their family and
personal expenses.

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• Target group
All pensioners of Central and State Govt. Undertakings/ Public Sector
Undertakings/ Defence Services / Reputed Companies/ Educational
institutions (Universities, Institutes, Schools and Colleges)/ Banks drawing
pension from the branches of the Bank.
• Eligibility
Entire loan is to be repaid before pensioner's attaining seventy five years of
age.
• Quantum of loan
A maximum of twelve months net pension subject to a maximum of Rs.1.00
lakh.
• Margin
Nil.
• Processing charge
1% of the loan amount.
• Repayment
(i) Maximum of 48 EMIs where the pensioner is below 70 years.
(ii) Maximum of 36 EMIs where the pensioner is above 70 years.
• Pre payment charges
Nil

United Housing Loan Scheme for Pensioners

• Eligibility

All pensioners of Central and State Governments, Central and State

Governments Undertakings, Defence Services, reputed Companies,

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 Educational Institutions (Universities, Institutes, Schools and Colleges)
including pensioners (VR and VRS) of United Bank of India.

• Monthly Net Pension

Min. Rs.5,000/-

• Entry Age

Max. 70 years

The pensioner must be physically fit and mentally alert to execute the
documents. Person(s) in paralytic condition or bed-ridden is/ are not eligible
for the loan.

• Purpose

 Renovation/ extension/ repair/ furnishing of self-occupied house/ flat;

 Purchase/ construction of new house/ flat;

 Purchase of old house/ flat not old over 35 years from the date of
completion of construction.

 Securing shelter in any "Old-Age Home"

Quantum of Loan Maximum Rs. 2 lakh provided total deduction including

EMI of the loan must not exceed 40% of the borrowers' net monthly pension. If
spouse becomes co-borrower and if he/she is also pensioner drawing pension from

21
 the branch, pension of both of them shall be considered for determining the
quantum of loan within the overall ceiling.

Repayment Period Entire loan has to be liquidated before borrower's attaining

75 years of age (subject to ceiling of 10 years repayment period). The age of the
1st pensioner or from whose income (also service holder/ pensioner), the major
recovery of loan will be made, shall be the deciding factor for the period of loan.
However, where loan is extended for getting shelter in "Old -Age Home" total
repayment period including the extended period must not exceed 10 years (120
EMI).

Deposit Scheme for senior citizens

Banks have been permitted to formulate, with the approval of their Boards, fixed
deposit schemes specifically for resident Indian senior citizens offering higher and
fixed rates of interest as compared to normal deposits of any size. These schemes
should also incorporate simplified procedures for automatic transfer of deposits to
nominee of such depositors in the event of death. Deposits over five year have
enjoy tax exemption under 80C. TDS is applicable unless Form 15 H is submitted
to the bank. Since RBI receives many complaints that tax is deducted, senior
citizens would do well to file Form 15 H in time.

Facilities for pensioners

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 Almost all the pensioners, by virtue of the retirement age fixed by the
Government, are senior citizens. The following facilities, among other, are available
to pensioners:

Credit of pension to pensioners’ accounts on last 4 days of month so that the

pensioner can draw pension on the 1st day of the next month itself.

Joint account with spouse allowed.

Pension slips to be issued at first time and thereafter whenever there is a change.

For incapacitated pensioners - branch to depute an officer to the residence of the

pensioner for getting/certifying the life certificate.

Banks to accept nominations furnished by pensioners in Form ‘A’ or ‘B’ in respect

of payment of arrears of pension of the deceased pensioner.

RBI has issued necessary instructions to all the banks disbursing pension to
ensure that the pensioners get the best possible customer service. Most of the
agency banks have since set up Centralized Pension Processing Centers (CPPCs)
which will be responsible for receipt of the Pension Payment Orders (PPOs),
calculation of pension/Dearness Relief etc. and crediting the amount directly to the
pensioners’ accounts through this system.

RBI Guidelines

1. Reverse mortgage loan

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 RBI likely to issue norms for reverse mortgage in credit policy meet The
Reserve Bank of India (RBI) on April 29 in its forthcoming annual monetary
policy meeting is likely to announce the prudential norms for reverse mortgage
loans to safeguard banks in a falling real estate market. Reverse mortgage scheme
was announced by the Union Finance Minister P. Chidambaram in the Finance
Bill 2007 as a social security measure for the elderly.
Recently, National Housing Bank (NHB), a subsidiary of Reserve Bank of
India (RBI), announced its final operational guidelines on reverse mortgage.
Following are some of the key features of the scheme:

• The facility will be made available to those above the age of 60 years;
Joint ownership with spouse is also permitted even if one of the borrowers
is below 60.

• The scheme applies only to self-acquired and self-occupied properties,

owned by senior citizens and having a residual life of at least 20 years.

• The amount of loan would depend on the market value of residential

property, as assessed by the primary lending institution (PLI), age of
borrower and prevalent interest rate.

• The PLI should ensure that the borrower’s equity in the residential
property does not fall below 10% during the tenor of the loan.

• The borrower will not be required to pay any penalty towards

prepayment of loan.

• The lending institutions can frame their respective internal policy

guidelines but the same should be fully disclosed to the potential
borrowers upfront.

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 • The amount received through reverse mortgage is considered as loan
and not income; hence the same will not attract any tax liability.

2. Facilities for pensioners

• RBI has issued necessary instructions to all the banks disbursing

pension to ensure that the pensioners get the best possible customer
service.

• Banks to access the Government website and effect payment of revised

Dearness Relief without waiting for RBI instructions.

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 STATE BANK OF INDIA

The State Bank of India, the country’s oldest Bank and a premier in
terms of balance sheet size, number of branches, market capitalization and
profits is today going through a momentous phase of Change and
Transformation – the two hundred year old Public sector behemoth is today
stirring out of its Public Sector legacy and moving with an ability to give the
Private and Foreign Banks a run for their money. The origin of the state bank
of India goes back to the first decade of the nineteenth century with the
establishment of the Bank of Calcutta in Calcutta on 2 June 1806.

SBI PLAN FOR SENIOR CITIZEN (DEPOSITE SCHEME)

• Purpose

To provides a deposit Scheme with Differential rate to senior citizens.

• Eligibility

Applicant senior citizens i.e. resident with age of 60 year or above on the
date of acceptance of deposit availability at all branch accepting ' personal
segment' deposit.

• Type of Deposit

Term deposit/Special term deposit

• Tenure of deposit

1year and above.

• Minimum amount

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 Rs. 10000 and thereafter in multiples of Rs.1000.

• Payment of interest

At the time of maturity or at quarterly intervals or monthly interval (at

discount rate), as specified by the depositor.

• Premature withdrawal

a) It is permitted subject to 1 if the term deposit, having tenure of less

than 3 years, is withdrawn before the expiry of contract period then
interest will be paid at the rate applicable to normal term deposit of the
bank for period actually run.

b) If the deposit is withdrawn after 3 years then the interest will be paid at
contracted rate less o.50%.

DEPOSITS OF Resident Indian SENIOR CITIZENS

(Age 60 years and above)
For deposits below Rs One Core
Tenors Existing w.e.f. Tenors Revised w.e.f.
27.07.2009 08.09.2009
15 days to 45 days 3.00 15 days to 45 3.00
days
46 days to 90 days 4.00 46 days to 90 4.00
days
91 days to 180 5.25 91 days to 180 5.25
days days
181 days to less 6.00 181 days to less 6.00
than 1 year than 1 year

27
1 year to less than 7.00 1 year to less 7.00
2 years than 2 years
1001 days to less 7.50
than 3 years
2 years to less 7.50
1001 days 7.75
than 3 years
1001 days to less 7.50
than 3 years
3 year to less than 7.75 3 year to less 7.75
5 years than 5 years
5 years to less 8.00 5 years to less 8.00
than 8 years than 8 years
8 years and up to 8.25 8 years and up to 8.25
10 years 10 years

LOAN TO PENSIONERS
If you are a Central or State Government pensioner drawing your pension
through one of State Bank of India branches and are not more than 72 years of age,
customer can avail of a loan from SBI branch to meet your personal expenses. Bank
understands that customer may have an urgent or unexpected need for funds or a
family obligation to be fulfilled .Customer can avail a loan of up to a maximum of
12 months pension, subject to a ceiling of Rs.1,00,000. The documentation is easy.

The loan may be repaid over 5 years and will carry a low interest rate of
12.75% p.a.

28
 There are no processing fees, no hidden costs and no prepayment penalties.
Whenever bank has some surplus funds, customer can credit his/ her loan account;
thereby customer can reduce loan liability and interest burden.

Salient features of the Scheme

• Eligibility
All Central and State Government pensioners, whose pension accounts are
maintained by bank branches. The pensioner should not be more than 72
years of age.
• Purpose
To meet personal expenses.
• Loan Amount
A maximum of 12 months pension with a ceiling of Rs.1,00,000/-
• Margin
Nil
• Security
The spouse eligible for family pension should guarantee the loan or any
other family member or a third party worth the loan amount.
• Repayment
60 Equated Monthly Instalments (EMIs) – if age of Pensioner at the time
of loan sanction is up to 70 years

48 Equated Monthly Instalments (EMIs) – if age of Pensioner at the time

of sanction is between 70 – 72 years
• Rate of Interest
0.50% above SBAR floating i.e. 12.75% p.a. (w.e.f. 01.01.2009)

29
 • Authorized Branches
All branches maintaining pension accounts. The facility is available only
from the branch which is maintaining pension account of the applicant.

Benefits are available to the pensioners

• All processes are automated, and the pensioner gets timely and accurate
payment of pension within the time specified by the Government (e.g., first
date of the month for State Govt. pensioners).
• Delays on account of de-centralization due to delays in receipt of instructions
from the Pension Paying Authority on D.A revision, payment and /or
restoration of commutation etc. and in calculation thereof are now eliminated.

SBI REVERSE MORTGAGE LOAN SCHEME (FOR 60+ SENIOR

CITIZENS)

The State Bank of India (SBI) started offering reverse mortgage products for senior
citizen on October 12, 2007.

• Objective of the scheme

To provide a source of additional income for senior citizens of India who

own self-acquired and self-occupied house property in India.

• Eligibility

a) No. of borrowers

Single or jointly with spouse in case of a living spouse.

b) Age of first borrower

30
 Above 60 years.

c) No. of surviving spouses on the date of sanction of loan-

Should not be more than one. Borrowers will have to give an undertaking
that they will not remarry during the currency of 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.

31
  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 and number of borrowers.

Case– Title in single name and loan availed jointly with spouse.

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 supersedes all earlier
wills, if any. The borrower to undertake that no fresh will shall be made
during the currency of the loan.

h) Encumbrances

The property should be free from any encumbrances. However in

case of property purchased by availing Home Loan from SBI and
mortgaged to SBI, it will be considered for RML, subject to closure of the
Home Loan account out of the proceeds of RML.

i) Residual Life of property

It should be at least 20 years in case of single borrower and 25 years in

case of spouse being below 60 years of age.

Borrower Life of property( in year)

single borrower 20
Spouse being below 60 years of age 25

Certificate from empanelled engineer/architect will be required to be

obtained for this purpose, in addition to valuation of property.

32
• Security

The RML shall be secured by way of equitable mortgage of residential

property

• 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.

• Disbursement

By credit to an SB account in the joint names of the borrowers operated

by E or S.

• Periodicity of availing loan

a) Monthly / quarterly payments

b) Lump sum payment

• Quantum of loan

The loan amount would be 90% of the value of property. Loan amount
would include interest till maturity. The loan installments payable to the

33
 borrower(s) would be as under for a loan amount of Rs.1 lakh (at interest
rate of 10.75% p.a.):

The maximum loan amount is kept at Rs.1 Crore (monthly payment

Rs.22,500/- for 15 years) and minimum Rs.3 lakh (monthly payment
Rs.675/- for 15 years).

Example of arriving at the monthly installments:

Property value: Rs.10 lakh

Qualifying loan amount

Quantum of loan

(90% of property value):Rs.9 lakh

Tenor: 15 years

Monthly installment: Rs. 225 x 9 = Rs.2, 025/-

• Purpose of Loan

34
 For supplementing income, any personal expenses, house repairs, etc.
Loan amount should not be used for speculative, trading and business
purposes.

• Repayment/Settlement

a) The loan shall become due and payable only when the last 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.

b) 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.

c) 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.

d) A reasonable amount of time, say up to 6 months, may be provided when

RML repayment is triggered, for house to be sold.

e) 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.

f) Borrowers will be required to submit annual life certificates in the month

of November every year. This certificate will also include clauses

35
 regarding marital status, and permanent residence of the borrowers, in
addition to the balance confirmation as on 31st October of that year.

g) 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.

• Foreclosure

The loan shall be liable for foreclosure due to occurrence of the following
events of default.

a) If the borrower(s) has/have not stayed in the property for a continuous

period of one year.

b) 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.

c) If borrower(s) declare himself/herself/themselves bankrupt.

d) If the residential property so mortgaged to the Bank is donated or

abandoned by the borrower(s).

e) 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

36
 house's title; changing the house's zoning 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 a gift or will.

f) Due to perpetration of fraud or misrepresentation by the borrower(s).

g) If the government under statutory provisions, seeks to acquire the

residential property for public use.

h) If the government condemns the residential property (for example, for

health or safety reasons).

i) Any other event such as re-marriage of the borrower(s) etc which shall
have an adverse impact on the loan settlement prospects.

j) Borrowers do not accept the revised terms on revaluation of property

and interest reset at the end of every 5 years from sanction.

• Pre-payment of loan

a) The borrower(s) will have option to prepay the loan at any time during
the loan tenor.

b) There will be no prepayment penalty.

• Valuation/Revaluation of property and option for the Bank to adjust

payments

a) After the initial valuation to determine the loan amount, subsequent

revaluations will be done at intervals of 5 years.

b) 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

37
 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 exceed 90% at maturity.

c) If the Borrower does not accept the revised terms, no further payments
will be effected 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.

• Interest Rate

10.75% p.a. (Fixed) subject to reset every 5 years.

• Processing fee

0.50% of the loan amount, minimum Rs.500/- and maximum of Rs.10,000.

• 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.

• Insurance and maintenance of house property

a) The house property will be insured by the borrower at his cost against
fire, earthquake and other calamities.

38
 b) The borrower shall ensure to pay all taxes, charges etc.

c) Bank reserves the right to pay insurance premium, taxes, charges etc.
by reducing the loan amount to that extent.

d) The borrower shall maintain the property in good condition

• 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 product

All branches.

39
 CANARA BANK Fund in 1906, this small business blossomed into a
limited company called Canara Bank Limited in 1910. In 1969, fourteen
major banks in the country were nationalized; Canara Bank was one of them.
Canara Bank soon launched into a massive expansion drive. By the early
1980s the shape that Canara Bank was finally going to take began to emerge.
Canara Bank is one of the most proactive public sector banks. It has led not
just in exploiting technology to create greater efficiencies but has also led in
creating new products. Several types of accounts which specifically cater to
the needs of children, high net worth individuals and senior citizens.

ASHRAYA DEPOSIT SCHEME (FOR SENIOR CITIZENS)

• Eligible accounts

 Domestic Fixed Deposits

 Kamadhenus Deposits.

• Eligibility

40
  Individuals, who have completed the age of 60 years and above, in
single or joint names.

 In case of joint account, accounts can be opened jointly with other

Senior Citizens or with other persons below the age of 60 subject to the
condition that the Senior Citizen is No.1 depositor

• Investment

Minimum Rs. 1000/-

Maximum - No ceiling (Can be deposited in odd amount also)

• Period of Deposit

15 days to 120 months Kamadhenu Min. Period – 5 months

• Interest rate

Additional 0.50% rate of interest for deposits less than Rs.1 crore.

• Periodicity of interest payment

 Monthly (discounted) or quarterly on Fixed Deposits

 Compounded quarterly on Kamadhenu Deposits

• TDS on interest

Applicable

• Nomination facility

Available

• Loan facility

41
 Available up to 90% of the balance deposit amount

• Penalty for pre- mature closure

No penal cut. Wherever preferential rates are extended for bulk deposits
interest payable at base rate for the period run.

• Mandatory documents

At the time of opening of new deposit account a certified copy of any of

the following documents may be produced.

 Secondary School Leaving Certificate indicating the date of

birth.

 LIC Policy

 Voters Identity Card

 Pension Payment Order

 Birth Certificate issued by the competent authority

 Passport

 Any other documents acceptable to the Bank

• Application & documents

 Application Form

 Form 60 or 61 (if customer does not have PAN Card)

42
  Photograph of depositor/s (2 copies)

 Proof of address as per KYC (Know Your Customer) Norms

 Any other related documents as applicable to proprietor ship

concern, Partnership Firm, Company, HUF etc.

KAMADHENU DEPOSIT (Re-investment Plan)

• Eligibility

Individual, Joint (not more than 4), a Guardian on behalf of a minor, HUF,
Partnership, a Company, Association or any other Institution
• Investment

Minimum Rs.1000/-
Maximum - No ceiling
(Can be deposited in odd amount also)

• Period of Deposit

Minimum 5 months
Maximum 120 months
(Can be for odd period also)
• Interest rate

Depending upon the periodicity of the deposit.

• Periodicity of interest payment

On Maturity.

43
• Special rate for senior citizens
Additional 0.50% rate of interest for deposits less than Rs.1 crore.
• TDS
Applicable.
• Nomination facility

Available.
• Loan facility
Available up to 90% of the deposit amount.
• Penalty for pre- mature closure

No penal cut.
• Extra facility
 Facility of part withdrawal of deposits in units of Rs.1000/-
keeping the rest of the deposit to earn contracted rate of interest,
available.
 Interest compounded quarterly
• Application & documents

 Application Form
 Form 60 or 61 (if customer does not have PAN Card)
 Photograph of depositor/s (2 copies)
 Proof of address as per KYC Norms
 Any other related documents as applicable to proprietor ship
concern, Partnership Firm, Company, HUF etc

CAN PENSION (Loan for Senior Citizens)

44
• Purpose

To meet the cost of medical expenses and other genuine needs

• Eligibility

Pensioners of Central / State Governments / PSUs / Corporate

Pensioners / Pensioners of Banks provided they all draw pension through
our branches.

• Quantum

Ten month's pension amount or 1,00,000/- whichever is lower.

• Rate of Interest

12.00%

• Repayment

Up to 36 months in EMIs (Equated Monthly Instalments).

• Security

Co-obligation of spouse/ suitable person.

CANARA JEEVAN - Reverse Mortgage Loan

The union finance minister during his budget speech for the year 2007-08
had announced formulation of a novel financial product for senior citizens i.e.
Reverse Mortgage Loan. . Reverse Mortgage Loan is a loan that allows owners
of residential property to convert their home ownership into cash flows, for

45
 meeting their living & other expenses. Unlike mortgage, which is generally used
to secure finance, Reverse Mortgage converts a self-owned property into
finance.

In the present scenario, for most senior citizens & those nearing retirement
the biggest fear is the need for money to the comfortably after retirement.
Reverse mortgage scheme helps them to convert their dwelling house into liquid
cash flow to meet their living expenses.

This with the above objective of financial needs of the senior citizens, a
new loan scheme is introduced with immediate effect, namely “CANARA
JEEVAN” - Reverse Mortgage Loan Scheme for Senior Citizen.

Feature of the reverse mortgage loan

• Objective

To meet the financial need of senior citizens owning self occupied

residential property.

• Eligible Borrower

 Owners of residential house/ flat, who are residents of India.

 Owner of the property should be above 60 year of age.

 The loan shall be in the joint name of the borrower & his spouse
irrespective of the title of the property.

 In the cases at least one of them should be above 60 years of age

& the spouse/ joint borrower should be more than 55 year of age.

46
  In case of jointly owned properties the joint owner who is aged
60 years shall be the first borrower.

 The property should be self acquired & self-occupied as

permanent primary residence.

 The residential property should be free from any encumbrances.

 The residual life of the property should be at least 20 years.

 In case of flats the age of the property should not be more than
10 years.

 Commercial property will not be eligible for Reverse mortgage

loan.

• Determination of Eligible Amount of Loan

 The amount of loan will depend on market value of residential

property, as assessed by the bank, age of borrower & prevalent interest
rate.

 The table given hereunder may serve as an indicative guide for

determining loan eligibility:

A) In respect of Houses:

Age of the borrower Loan as proportion of Assessed Value of Property*

60-65 70%
66-70 70%
71-75 80%
Above 75 90%

47
*Loan amount including interest till maturity

- In case of independent houses the minimum loan quantum shall be Rs.

5 lakh & the maximum shall be Rs.50 lakh.

B) In respect of flats:

Age of the borrower Loan as proportion of Assessed Value of Property*

Age of the flat
Less than 2 year 2 – 5 year 5 – 10 year
60-65 60% 55% 45%
66-70 65% 60% 50%
71-75 70% 65% 55%
Above 75 75% 70% 60%

* Loan amount including interest till maturity.

-The Equity to Value Ratio – VER should not at any time during the tenor of
the loan fall below 10%.

-In respect of flat the maximum quantum shall be 25 lakh.

-Age of the flat should not be above 10 years.

• Nature of Payment

Nature of Payment to be decided in advance as part of the Reverse mortgage

loan covenants as under:

 Periodic payment (monthly/ quarterly) to be decided mutually

between the bank & the borrower upfront.

 One time Lump-sum payment, not more than 20% of the eligible
loan amount.

48
  Lump-sum payment may be made conditional & limited to
special requirements such as medical exigencies up gradation,
renovation & extension of the house etc.

Chart showing monthly/ quarterly/ lump sum payments are furnished in the
Annexure II, III & IV to the circular.

Illustration:

Eligible loan amount of Rs. 500000/- for a repayment period of 15 years with rate
of interest @ 10.50% (fixed)

a) If monthly payment is opted for:

Monthly amount payable shall be Rs. 1140 p.m.

b) If 20% of the loan amount i.e. 100000/-is opted in lump sum & balance 80% i.e.
Rs.400000/- in monthly installments:

Lump sum amount payable shall be Rs. 22360/- & the monthly installment
payable by the bank shall be Rs. 912 p.m.

• Purpose of the loan

 Up gradation, renovation & extension of residential property.

 For uses associated with home improvement, maintenance/

insurance of residential property.

 Medical emergency expenditure for maintenance of family.

 For supplementing pension/ other income.

49
  Repayment of an existing loan taken for residential property to be
mortgaged.

 Meeting any other genuine need.

 Use of Reverse mortgage loan for speculative, trading & business

purposes shall not be permitted.

• Purpose wise sublimit

Purpose Maximum permissible limit as % of the

total eligible loan quantum
a. Up gradation, renovation &
extension of residential property.
b. Repayment of an existing loan for
the residential property to be
mortgaged. 20%
c. For uses associated with home
improvement, maintenance/ insurance
of residential property.
d. Medical, emergency expenditure
for maintenance of family
For supplementing pension/ other income 80% as monthly/ quarterly installment
Meeting any other genuine need
as agreed

• Period of Loan

Maximum 15 years.

50
• Interest Rate

10.50% p.a. (fixed) with reset every three years.

(Canara Jeevan -For fresh loans sanctioned on or after 12.03.2009 up to

31.12.2009. interest rate is 9.50% p.a. (fixed) with reset every three years)

• Maturity

Loan shall be secured by way of mortgage of residential property, by way

of Registered Mortgage or equitable mortgage with memorandum of
deposit of title deeds in favour of the bank.

• Valuation of Residential Property

 Valuation of the property is to be done once every three years.

 Quantum of loan may undergo revisions in case there is

reduction in the value of the property based on such valuation of
property, at the discretion of the bank.

 Loan instalment to be refixed keeping in view applicable Rate of

Interest (ROI) & valuation of property.

 No upward revision shall be permitted in either loan amount or

periodical installments payable to the borrower irrespective of increase
in the value of the property.

 The bank shall have the option to revise the periodic / lump sum
at such frequency or interval based revaluation of property, which in
any case shall be at least once every three years.

51
  If the Borrower does not accept the revised terms, no further
payment will be effected by the bank. Interest at the rate agreed before
review will continue to accrue on the outstanding amount of the loan.

• Disbursement

 The loan will be extended as regular monthly/ quarterly cash

advances. Option once exercised monthly or quarterly payment cannot
be changed at a further date.

 Lump sum payment to the extent of 20% of the amount arrived

at.

 In case of periodic disbursement, the payment shall be made

during the loan period of 15 years or till the death the surviving
borrower, whichever is earlier.

 The bank will pay the loan proceeds directly to the borrower, in
cases pertaining to retirement of existing deal 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

institution, the bank may, at its discretion, consider permitting use of
part proceeds of Reverse mortgage loan to prepay/ repay the
outstanding with that institution. The loan amount will be paid directly
to that institution to the extent of the loan outstanding with that
institution with a view release the mortgage.

52
• Repayment of the loan

 The loan shall become due & payable only when the last
surviving borrower dies or would like to sell the home, permanently
moves out of the home.

 In case of death of one of the borrower, the repayment will take

effect after the death of the surviving borrower.

 The entire outstanding liability including accumulated interest to

be met by the proceeds received out of the sale of the mortgaged
property & any surplus to be paid to the heirs.

 The borrower(s) or his/ her/ their legal heir/ heirs shall be

provided with the first right to settle the loan along with the
accumulated interest, without sale of property.

• Functioning authority

The scheme involves a lot of counseling to be done to the senior citizen

borrowers; the scheme may be implemented through select branches in each
circle, depending upon the potential.

• Repayment of Loan by Borrower(s)

 The Borrower(s) will have option to prepay the loan at any time during
the loan tenor.

53
 Prepayment levy/ penalty/ charge for such prepayments @ 2% of the
outstanding liability shall be discharge in case the closure involves
takeover by other bank/ HFI.

 In case the prepayment is out of the borrower(s) own sources no

prepayment penalty shall be levied.

 Further in case of closure of the loan either out of borrower’s own

sources or by takeover by other bank/ HFI, concessions permitted shall
be recovered.

• Documentation

 Application form - Housing loan application form (NF 964) with

suitable modifications.

 Loan agreement as per Annexure V of this circular. Mortgage by way

of Registered Mortgage (Annexure VI) equitable mortgage with
memorandum of deposit of title deeds.

 Borrower(s) to execute a will (as per Annexure VII of the circular)

appointing the bank as Executor and Trusty which should be got
registered.

 Photograph and PAN Number of all legal heirs to be obtained on the

application.

 Succession Certificate.

54
  The bank shall obtain legal opinion from the panel advocate for
ensuring clear title and marketability of the residence property, as per
procedure in vogue.

 Documents should be handed over to the panel advocate by branch.

For this purpose circle should identify senior a experienced advocates
from the bank’s panel of advocates.

 In case of pensioners, the pension account should be got transferred to

our bank.

 To enable the bank to continue the periodical payments the borrower

has to submit the following documents every year.

- Property tax paid receipts.

- Life Certificate in the month of November.

- IT Clearance certificate.

• Processing charges

0.25 % of the loan amount with a maximum of Rs.5000/

• Inspection of the property

 Pre sanctions Inspection & Inspection report as per extant

guidelines are applicable to the scheme.

 Inspection of the property to be conduced once in six months to

ascertain whether any of the occurrences listed under
‘FORECLOSURE’ has taken place.

55
  During regular Inspection of the branch, the Inspection Official
has to Inspect all the properties against which loan is granted under the
subject scheme.

• Right of Rescission

 After the documents have been executed & loan transaction

finalized, Senior Citizen Borrowers shall be given up three business
days to cancel the transaction i.e., the “right of rescission”.

 If the loan amount has been disbursed, the entire loan amount
will need to be repaid by the borrower within this three days period
without interest.

• Foreclosure

 The loan shall be liable for foreclosure due to occurrence of the

following events of default.

 If the borrower(s) has not stayed in the property for a continuous

period of one year

 If the borrower fails to execute further documents as demanded

by the bank including acknowledgement of debt a security.

 If the borrower(s) fails to pay property taxes or repair or

maintain & repair the property or fails to keep the home insured, the
bank reserves the right to insist on repayment of loan by bringing the
residential property to safe & utilizing the sale proceeds to meet the
outstanding balance of principal & interest.

56
  If borrower(s) declares himself / herself /themselves bankrupt.

 If borrower/s remarry.

 If the residential property so mortgaged to the bank is donated or

abandoned by borrower (s)

 If the borrower(s) effect change 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
houses title ; changing the houses zone classification or creating further
encumbrance on the property either by way taking out new debt against the
residential property or the interest by way of a gift or will.

-Due to perpetration of misrepresentation by the borrower(s).

- If the government under statutory provision ,seeks to acquiring the

residential property for public use .

-If the government acquires /condemns property (for example, health or

safety reason).

• Counseling

The senior citizen borrowers need to counseled/ educated on the

various issues involve in the scheme.

 Branches should clearly explain to the prospective borrowers the

terms & 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 re-

57
 valuation & review of terms & all related aspects of the Reverse
mortgage loan.

 Branch to counsel the borrower about the possible impact to the

borrowers due to adverse movements’ interest rates & property price
fluctuations.

 Circle may identify Senior Citizens Associations& involve them

in the counseling.

 All the costs to the Borrower(s) that are associated with the
transaction should be specified to the borrower(s).

 The heads of branches selected to handle the proposals should

be adequately trained by the Circle to enable them to counsel the
applicant’s property.

• Miscellaneous

 KYC norms to be complied with as per extant guidelines.

 The loan is to be classified under-Other Personal Loans-Non

Priority.

 The data pertaining to the scheme to be reported in PSR 71 as a

Separate scheme under Other Personal Loan Segment.

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 Conclusion

The budget estimates of 2007 reveals that the old age population in India will
increase to113 million by 2016 & 179 million by 2026. On an average, the life
expectancy is77 years, & this could increase to 82 years by 2020 owing to improved
heath care facilities & better nutrition. The increase in this segment of population
should not be ignored by the policy- maker as it represents a huge opportunities for
all schemes to senior citizen.

The retirement person’s percentage in the total population is estimated to be 8.9%

by 2016 & 13.3% by 2026. Considering the market requirement innovative
products/ services should be introduced by banks to the senior citizens.

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 BIBLIOGRAPHY

• The Icfai University press

Professional Banker November 2008

Professional Banker February 2009

• www.google.com
• www.rbi.org.in
• www.sbi.co.in
• www.canarabank.com

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