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TAX FORUM: QUESTIONS & ANSWERS
Reverse mortgage loan on joint family property
I had approached State Bank of India, Shoranur branch, Palghat District, Kerala, for a reverse mortgage loan on a property bequeathed on me by my late father now standing in my name on which I pay property tax. The property is in my possession. The loan, however, had been declined on the ground that the property being ancestral, does not qualify for the loan.
Loans are granted according to the lending policy and the norms, which each bank may follow. Since reverse mortgage loan matures on the death of the borrower, who is an individual, it is understandable that such a loan cannot be granted to a Hindu joint family or an individual against joint family property, because a joint family property involves interest of persons other than the borrower. All the same, there appears to be an error on the part of the bank officials, if they had ruled out the loan on the assumption that a property is a joint family property, merely because it is an inherited property. Property devolving under a Will cannot be joint family property so that if this were the objection, it could be explained to branch officials and their superiors that there is no risk for the bank since there is no other person interested in such property acquired under a Will. Will is possible in respect of joint family property only in respect of the testator’s undivided share in the joint family and not where a property is bequeathed by a Hindu as absolute property out of his self-acquired assets.
S. RAJARATNAM
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