Mumbai: ICICI Bank Ltd, India’s largest private sector bank, on Wednesday launched first-of-its-kind mortgage guarantee scheme in India which allows the bank to offer home loans up to a 30-year tenure to persons up to the age of 67 years.

Under the scheme, new home loan borrowers have to pay 1-2% of the total amount as a one-time premium for the mortgage guarantee which guarantees the bank against an initial default by the borrower and allows it to offer an extended tenure on the loan.

Managing director and chief executive officer Chanda Kochhar said the mortgage guarantee allows the bank to offer loans up to Rs75 lakh for middle-aged people who would otherwise not qualify for home loans because their loan tenure exceeds the 60-year age cut off for such loans.

“It meant that they either had to put more money on their home or look for a small place. This product allows us to offer more options to home loan customers with a 23 or 25-year home loan period because the mortgage guarantee takes care of the incremental risk," Kochhar said.

Kochhar hopes that the new product would be as revolutionary compared to previous ICICI initiatives in the home loan space.

“Before we started in home loans, no bank used to offer door-step service. We also pioneered the floating rate revolution. We are today the largest private sector bank in mortgages. This product could be a catalyst to the home loan market because it will expand the eligibility of people to take home loans," said Kochhar.

Mortgages dominate ICICI’s retail loan book which constitutes 43% of the bank’s Rs3.99 trillion loan book as in June.

“Our home loan book has been growing at 25% to 27% on an annualised basis. Mortgages as a business total Rs9.7 trillion and has grown 15% on a compounded annual growth rate in the last ten years. India’s mortgage as a percentage of GDP is just 8% compared to 24% in China and 34% in Singapore which means we have a long distance to cover," Kochhar said adding that the current shortage of homes is 1.8 crore units.

ICICI has launched this product in association with India Mortgage Guarantee Corp., which is a joint venture between National Housing Bank (NHB), International Finance Corp, US-based Genworth Financial Inc. and Asian Development Bank (ADB).