New Delhi: The idea of a reverse mortgage loan is catching up fast with the senior citizens in India. Finance Minister P Chidambram had earlier promised to introduce a reverse mortgage product and SBI the largest public sector bank has already launched a reverse mortgage loan in October this year.

This reverse mortgage loan (RML) is all set to revolutionize the way people above the age of 60 spend the rest of their lives. Mostly comprising of retirees and pensioners, this age group earlier didn't have any such resource, which could bring in money in need or to indulge.

Unlike their western counterparts, senior citizens in India have a pretty subdued lifestyle. While a westerner may seek a new adventure, hobby, travel, social activity or even a new venture after his retirement, Indian retirees think of spending the rest of their lives on meager pensions.

Reverse mortgage will allow them to have cash against the mortgage of their properties for the rest of their lives, without worrying about repayments. The bank recovers the loan later after selling the property and a surplus if any is reimbursed to the legal heirs of the property owner.

Explaining the concept Sangeet Shukla, Chief GM SBI said, "A RML need not be repaid by the borrowers during their lifetime. They will also continue to stay in their houses during their lifetime. Thereafter, an option is available to the legal heirs to repay the bank loan and redeem the property. If this option is not exercised, the bank will sell the property and liquidates the loan and surplus, if any, will be passed on to the legal heirs."

SBI announced a reverse mortgage scheme for senior citizens above the age of 60 years. Available from all branches of SBI, it will have a fixed interest rate of 10.5 percent, which will be reviewed every 5 years. Bank of Baroda (BOB) is also planning to launch a reverse mortgage scheme from November this year. The other major player in reverse mortgage segment is Dewan Housing Finance Limited (DHFL).