India’s NHB Requests Reverse Mortgage Proceeds to be Tax Free

201003161817.jpg The Financial Chronicle is reporting that The National Housing Bank (NHB) is planning to seek tax exemption for its new reverse mortgage loan-enabled annuity (RMLEA) schemes from the finance ministry, a top official said.

The NHB, the regulator for housing finance companies is also asking state governments to sponsor insurance schemes to expand RMLEA schemes to people who are covered under the government’s housing projects.

The RMLEA was launched in December 2009 and while it was an improvement over the orginal product it has yet to catch on. “This product will not go without an insurer,” said Sridhar, who is the chairman and managing director of the Central Bank of India said his bank was the first to launch the product with Star Union Daichi Life Insurance.

To increase the penetration of the new scheme, NHB has invited more bankers to join the initiative along with an insurance partner, said Sridhar. “To give boost to penetration, the government should exempt annuity payments to the customer from income tax,” said Sridhar.

The state governments should come forward to cover the risk by sponsoring an insurance scheme, he added.

NHB to seek tax exemption on reverse mortgage scheme

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