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nism-series-xa-reverse-mortgage-senior-citizens-rules[ INVESTMENT ADVISER (LEVEL 1) ]

What are the key operational and tax features of a 'Reverse Mortgage Loan' (RML) for senior citizen homeowners in India?

[ A ]Senior homeowners (60+) pledge their self-acquired residential home to a bank to receive regular monthly tax-free income streams (100% exempt u/s 10(43)) while continuing to live in the home without servicing monthly EMIs during their lifetime.[ CORRECT ]
[ B ]The senior citizen must vacate the house immediately upon loan sanction.
[ C ]The monthly payments received from the bank are taxed as salary income at 30%.
[ D ]The bank forces the senior citizen to pay monthly EMIs to the bank.
Takeaway

Option A is correct: Senior homeowners (60+) pledge their self-acquired residential home to a bank to receive regular monthly tax-free income streams (100% exempt u/s 10(43)) while continuing to live in the home without servicing monthly EMIs during their lifetime.

Derivation
A Reverse Mortgage Loan flips the conventional home loan cash flow: instead of the borrower paying the bank, the bank pays the senior citizen homeowner, drawing down against the pledged value of the self-acquired residential property. The borrower retains full lifetime occupancy rights and owes no monthly EMI servicing, which is precisely what makes it suitable for retirees who are asset-rich in their home but income-poor otherwise. The periodic payments received are explicitly exempt from income tax under Section 10(43), since they are structured as loan disbursements against property value, not taxable income. The loan is only settled after the demise of both spouses, typically by heirs repaying it or the bank recovering dues through sale of the property.
Why the others fail
B — The senior citizen must vacate the house immediately upon loan sanction.
Senior citizens retain full occupancy rights for life under a reverse mortgage; the property is only settled with the bank after the demise of both spouses.
C — The monthly payments received from the bank are taxed as salary income at 30%.
Reverse mortgage payments are explicitly exempt from income tax under Section 10(43), not taxed as salary income at the borrower's marginal slab rate.
D — The bank forces the senior citizen to pay monthly EMIs to the bank.
A defining feature of reverse mortgages is that the borrower owes zero monthly EMI repayments during their lifetime; the bank pays the homeowner instead.