Teach a lesson to your children who love your property and not you: Try Reverse Mortgage

 Mrs and Mr Sharma are now in their seventies. Both are retired government officers. They spent most of their life’s earnings for educating their three children. The eldest one became an engineer and currently settled in US with his wife.  The daughter who is a lecturer got married to a Doctor. Youngest one is a Dentist married to his batchmate in Dental College. Sharma and his wife stay in their three-bedroom apartment acquired by them a few years before their retirement using bank loans and savings in the Provident Fund, Insurance Fund etc. At present, both of them struggle as their pensions are not enough to meet the household expenses and medical treatment costs. The apartment they own is in the heart of the city and has a market value of more than 1.4 cr. (About two hundred thousand US dollars). None of his children send them any money nor do they take care of them. They have an eye not on the parents but on the share in their property. However, they don’t even lend a helping hand for maintaining the apartment.

In the above case, the couple is lucky to have some monthly income in the form of pension for the services rendered in the government for many decades. But, there are many old parents from the middle and lower class families who are at the mercy of their children for their maintenance. In both cases, parents live in pathetic and humiliated conditions finding it difficult to lead a decent life.

These parents are forced to reduce their household expenses by limiting their wants and go for cheaper, low quality medical services. The financial strains and lack of support from children would adversely affect their physical and mental health and social well-being. They live in a house which has huge market value, without gaining anything from it.

Why should they live in such humiliating conditions?

There is an excellent option for them to celebrate their old age with best of facilities, health care, nutritional food, and life style. That is the Reverse Mortgage Scheme which is in operation in many countries like United States, Australia, Canada etc. Consumer Financial Protection Bureau in United States had submitted a comprehensive evaluation report of the scheme to US Congress in June 2012, wherein they found that the reverse mortgages have the potential to become a much more prominent part of the financial landscape in the coming decades.

Let me summarize the provisions as applicable in India issued by the Reserve Bank.

• A homeowner who is above 60 years of age is eligible for reverse mortgage loan. It allows him to turn the equity in his home (which is a self-acquired property and clear from all encumbrances) into one lump sum or periodic payments mutually agreed by the borrower and the banker. He need not repay any amount during his lifetime.

• The loan granted is based on several factors: borrower’s age, value of the property, current interest rates and the specific plan chosen. The higher the age, higher the value of the home, the more money is available.

• Married couples will be eligible as joint borrowers for financial assistance, provided at least one of them being above 60 years of age.

• The banks have the option to revise the periodic / lump sum amount at such frequency or intervals based on revaluation of property periodically.

• The loan would become due and payable only when the last surviving borrower dies or would like to sell the home, or permanently moves out.

• On death of the home owner, the legal heirs have the choice of keeping or selling the house. If they decide to sell the house, the proceeds of the sale would be used to repay the mortgage, with the remainder going to the heirs.

• As per the scheme formulated by National Housing Bank (NHB), the maximum period of the loan is 15 years. The residual life of the property should be at least 20 years. Where the borrower lives longer than 15 years, periodic payments will not be made by lender. However, the borrower can continue to occupy.

• From FY 2008-09, the lump sum amount or periodic payments received on reverse mortgage loan will not attract income tax or capital gains tax.

Very few takers!

Since the launching of the scheme (about 5 years back), very few persons have availed of this scheme. No bank has adequately marketed this scheme among the senior citizens. Very few are aware of the benefits of this scheme that help them to lead a decent lifestyle. There is a need to make the procedures much simpler by going to their doorsteps, instead of them coming to the bank and waiting for long hours.

By availing this scheme, parents can settle the liabilities and live in peace. Taking a major portion of the funds upfront as lump sum would not be a good idea. This would result in not having enough funds when there is an emergency. 

Moral of the story

Through the Reverse Mortgage Scheme, parents can teach a good lesson to those greedy children who have an eye on the parent’s property and yet fail to support them financially.

(With inputs from friends at RBI, Punjab National Bank and Axis Bank)

Views are personal. Comments are welcome

                                                                                      © Sibichen K Mathew   

Prisoners of Life

                                                                                                               Image: rt.com

Child is a prisoner of parents

Parents are prisoners of their grown up children

Student is the prisoner of the school

Employee is the prisoner of the employer

Union is the prisoner of the politician

Wife is a prisoner of husband

Husband is a prisoner of wife

Lovers are prisoners of each other

Patient is the prisoner of the doctor

Doctor is the prisoner of the hospital

Priest is the prisoner of his religion

Servant is the prisoner of the Master

Minister is the prisoner of his party
Citizen is the prisoner of the state

Animals are prisoners of man

We are all prisoners of life

And death is the prisoner of destiny

        ( Freedom is a myth! )

                                      © Sibichen K Mathew

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Mandatory Corporate Social Responsibility: Let companies compete for doing the best

Corporate philanthropy is not a new concept. Thousands of large corporates all over the world have spent millions of dollars on charity, without any government telling them. But there are many companies who benefited a lot from the public infrastructure, yet didn't spend a penny for the community around them.  This has prompted many governments to bring in legislation to make it mandatory for companies to spend for charity.

Indian Government has passed its Companies bill (which replaces the 56 year old Companies Act of 1956) in its both houses with support from all political parties. This has paved the way for systematic fund flow for social welfare activities. The following are the salient features of the provisions related to the Corporate Social Responsibility (CSR) Project, incorporated in the Companies Bill which is pending Presidential assent.

Applicable for which companies?

Every company having Net worth of 500 Cr or more or

                                  Turnover of 1000 Cr or more or

                                  Net Profit of 5 Cr or more                during any Financial Year

Who will decide about how much to spend, and to which project?

• The Company has to constitute a CSR committee with a minimum of three directors, of which at least one should be an Independent Director.
• Committee should recommend the amount of expenditure  to be incurred
• The Committee should monitor the CSR activities from time to time
• The Board of the company shall approve the projects based on the recommendations
• At least 2% of the average Net Profit of the company of the last three years should be spent for CSR
• The companies shall give preference to the local area where they operate

Which are the areas/activities companies can spend?

Activities relating to

-          Eradicating extreme hunger and poverty

-          Promotion of Education

-          Promoting gender equality and empowering women

-          Reducing child mortality and improving maternal mortality

-          Combating human immunodeficiency virus, AIDS, Malaria, and other diseases

-          Ensuing environmental sustainability

-          Employment enhancing skills

-          Social business projects

-          Contributions to Prime Minister’s Relief Fund and similar funds established by Central and State governments for welfare of SC/ST/OBC/Minorities/Women

-          Such other matters as may be prescribed

What will happen if the companies don’t spend?

The companies need to specify the reasons in detail, if they couldn’t spend

Any other provisions to promote charitable activities in the Companies Bill?

Companies Bill provide for incorporation of companies solely for charitable purposes. If any company is formed for charitable activities, then the government may issue licence to allow that person/ Association of persons to be registered as a limited company without the addition to its name the word ‘limited’ or ‘Private Limited’. (Clause 8)

Under Clause 181, the Board of Directors may contribute to bonafide charitable or other funds

Under Clause 182, upto 7.5% of average on Net Profits of last three years can be spent as contribution to political parties  based on a resolution  passed at a meeting of the Board of Directors.

All expenditure and the names  of donees should be disclosed in the Profit and Loss Account.

Board of Directors can also contribute to National Defence Fund

What is the punishment for non-compliance to the provisions?

Fine upto 5 times the amount and/or  the Officer will be punished with imprisonment which can extend upto 6 months and 5 times the amount as fine

Some suggestions for companies

Beware of unscrupulous NGOs

There is a proliferation of NGOs in the country. There are many multinational NGOs whose objectives are not purely charitable. Many in the charity business exist for making profits, for enjoying comforts and the accompanying flamboyant lifestyle. There are a few aimed at destabilizing the country through overt and covert actions and subtle criticisms against the government and governance claiming to be the champions of poor persons, minorities, farmers and tribals. These NGOs are the happiest ones on hearing about the mandatory provision of CSR. Most of these NGOS will clamour for funds by demonstrating their political power and showcasing their power point presentations and strategically chosen photographs of their activities in the past.

Why not do the philanthropy directly?

Every company has managers and employees who are socially committed and willing to utilize their spare time for welfare activities. There will be more accountability if the company does the charitable activities through them. This will create team work, leadership skills, camaraderie, and loyalty among the employees. There will be a definite improvement in the productivity of the company once the energy and time of the employees and managers are channeled for such positive purpose. The companies should appoint welfare officers with experience in organizing charitable activities in reputed NGOs and in Government. Specific weightage may be given in the annual appraisals to all employees who actively participate in CSR activities

Let the auditors be proactive

Apart from critically analysing the figures in a company, the auditors should be proactive in analysing the nature of charitable activities undertaken by the company and the ultimate results for the target population. They need to report the findings to the CSR committee as well as the Board.

Some suggestions regarding the areas to focus

Start with a socio-economic survey

There is extreme hunger and poverty among many communities irrespective of the fact that they belong to privileged or under-privileged communities. In fact, there is substantial number of very poor persons among many ‘upper’ castes also. Companies can conduct socio-economic surveys in and around their location and identify the beneficiaries scientifically. They can take the help of independent survey agencies, but the surveys should be monitored by the company officials. There are several survey companies who outsource this work to unqualified field agents.

Promotion of education

a.       Infrastructural support to government schools and colleges

b.      Extend the facilities for vocational training for students

c.       Institute scholarships for poor students who are meritorious

d.      Identify and sponsor the education of students

e.      Collaborate with leading institutes to give coaching in Information Technology

f.        Establish research centres, academic chairs, and departments in colleges and universities

g.       Sponsor educational tours

h.      Adopt government schools and unaided private schools that cater to poor students

Promoting gender equality and empowering women

a.       Establishing and aiding women Self Help Groups

b.      Establishing credit societies for women

c.       Sponsoring meritorious women candidates for professional courses

d.      Free legal aid for women victims of offences

e.      Organize or arrange career oriented courses for women

Reducing child mortality and improving maternal health

a.       Sponsor the treatment of poor women admitted in govt hospitals for delivery

b.      Sponsor the expenses of babies born at govt hospitals

c.       Establish separate blocks to govt hospitals for poor women and children

Combating diseases

a.       Organize awareness programs in the community

b.      Publish information brochures for educating the public

c.       Organize vaccination programs

d.      Organize disease detection camps

e.      Sponsor the treatments of HIV patients

f.        Sponsor the families of people died due to AIDS

g.       Produce television programs and documentaries to spread public health

Ensuring environmental sustainability

a.       Organize eco-camps

b.      Implement schemes for cleaning the towns

c.       Establish permanent institutions for environmental protection

d.      Organize ecological awareness programs

e.      Publish magazines

Employment enhancing skills

a.       Establish vocational training institutes

b.      Sponsor career orientation programs in colleges

c.       Organize seminars by experts in institutions

d.      Give training to workers to improve their skills

e.      Give professional training to carpenters, artisans, plumbers, electricians etc

f.        Sponsor training programs for teachers in government schools

g.       Organize personality development programs for children and youth

Other projects

a.       Construction of houses for needy

b.      Rehabilitation of drug addicts

c.       Sponsor old age homes for poor people

d.      Adopt villages

e.      Sponsor bus transports in interior villages

f.        Assistance to government on slum development

g.       Sponsoring ambulances, medical equipment, organ transplant

h.      Supporting the surgery cost of needy patients

i.         Establishing schools in remote area

j.        Sponsoring salaries of teachers in villages

k.       Organizing law awareness programs for public to empower them

l.         Construction of roads in the remote areas

m.    Establishing or sponsoring counselling centres

Views are personal                                                          Sibichen K Mathew

Of A K Antony, St Thomas and the gospel of truth

Mr A K Antony, The Defence Minister of India is a Syrian Christian from Kerala.  It is immaterial whether he follows the Syrian Christian traditions or not. Syrian Christians in Kerala are believed to be the descendants of upper caste Hindus, who embraced Christianity through St Thomas, the disciple of Jesus, in the first century.  Thus all Syrian Christians are called St Thomas Christians. What does it matter today?

                                                         Photo: bbc.co.uk

Yes, it is relevant. Honorable Minister is in a precarious position today.  Entire opposition, media and many others complained that he has made an incorrect statement regarding the killings of five Indian Army men at Poonch, India’s territory near Pakistan.  Mr A K Antony gave a statement that the crime was committed by terrorists in the uniform of Pakistan Army.  This was made just a few hours after the incident. Mr Antony’s position was that he cannot make any vague statement accusing anyone unless he gets clear information on that. Hence at that point of time, he desisted naming the Pakistan Army as responsible for this attack.

Back to St Thomas, called as the ‘doubting Thomas’ in history. St Thomas was the only disciple of Jesus who openly declared to the other disciples that he won’t believe when they said about the resurrection of Jesus. Thomas said that he won't believe unless he can actually put his finger into the mark of the nails, thrust his hand into the place where the spear went into Jesus' side.   Later, Jesus appeared before him and said. "Thomas, here are my hands, here's my side, don't be faithless. But believe." And Thomas takes the ‘flying leap of faith’ and doesn't just say, "I believe." He says what no other disciple had said   "My Lord and my God."  Even now, Syrian Christians are being blamed as ‘Doubting Thomases’ whenever they do not admit anything categorically unless they are convinced.

Hon. Minister was correct

Media anchors like Mr Arnab Goswami can give a statement on the basis of rumours and field reports. Even the Congress spokesman can give his opinion on what he might not have personally seen. There is nothing wrong in that. But when a Minister makes a statement, it should be based on clear facts and evidence. Mr Antony was right in his initial statement. He, as a responsible minister representing this country cannot accuse another country without verifying the facts. He shared this to his fellow members in Parliament too.

Later when he got clear information, he made a fresh statement correcting his earlier position

Moral of the story

There is a difference between what someone says as a politician or as a common man and a statement from an authority in his official capacity. When a formal statement is made as a responsible authority, it should be based on verifiable facts. This is all the more important when you accuse another sovereign state.

Even in our daily life, how much of the tensions and conflicts could have been avoided, had we used our words and statements carefully after studying the genuineness of what we heard from others.

Disclaimer

I admit that I am also a Syrian Christian, and under the risk of getting labelled as another ‘doubting Thomas’. I don’t intend to give any clean chit to Pakistan. I am a small worm, and I have strong faith in Indian Army and its Intelligence. I am sure that the criminals and the entities behind them will be ultimately identified and punished. The views are personal.

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