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Credit/Debt Counselling

 

Are you in dilemma to take a loan or not? Are you not able to control of your financial situation? Are you over traced with your existing EMIs? Here is the solution. Credit/ Debt Counselling session with an expert counselor can help you to control your financial situation or help you to take decision on any banking product.
 
This is not a new idea; this concept is already very popular in developed countries. In USA, if you want to file a bankruptcy, you need to attend a counselling session with an approved nonprofit budget and credit counselling agency within six months of filing.
 
Credit Counselling (is also known as Debt Counselling) is a process by which a Credit Counselor educates the individual how to prepare a proper plan and budget on spending to control his/her financial situation and how to relief from the debts. Credit Counselling provides a Debt Management Plan which helps the individual for future financial planning also. Sometime credit counselling also involves negotiating with the creditors to help the individual to repay his/her debt with proper repayment plan.
 
In India, Reserve Bank of India has released a concept paper on Financial Literacy and Credit Counselling (FLCC) in April, 2008 and RBI has asked to all the banks to set up on a pilot basis, a financial literacy and credit counselling centre in the State/Union Territory, coming under their jurisdiction.
 
Need for Credit/Debt Counselling in India
  • With the change in lifestyle aspirations, more and more people are taking loans to fulfill their consumption needs. In many cases, the persons are not able to manage their debts and becoming defaulters. A Credit Counselling session will educate the individual to control his/her financial situation and also educate about the important things need to be taken care before taking a future debt.
  • In rural areas, especially the areas which are agricultural base, the people do not have proper financial education and they normally approach to the non-institutional money lender for their debts with high rate of interest (30% to 40% pa) and hardly they come out from the debts after paying high rate of interest. Only proper financial education can help them for better future and fulfill the dream of 100% banking facility to all the citizen of India.
  • The percentage of Non-performing asset (NPA) in Banking of India is continuously increasing which is the big concern for every bank. Only proper financial education through credit counselling process can stabilize or reduce the NPA percentage.
 
Some banks have already taken initiative to opening the Credit Counselling Centres in India like ‘ABHAY’ counselling centre (an initiative of Bank of India), Disha Trust (an initiative of ICICI Bank Ltd.) and Grameen Paramarsh Kendras (an initiative of Bank of Baroda).
 
The concept of Credit Counselling is just a new born baby in India and our central bank and some other banks have taken initiative to take care the baby but it’s just a beginning and long way to go to build a good and fair banking habit of all Indian.