It could be made a part of the fair lending code for banks.....Khyati Dharamsi. Mumbai
The Reserve Bank of India has suggested banks to form financial literacy and counselling centres (FLCCs) in both rural and urban India, which would provide free counselling to people. The draft if implemented would take forward the current credit counselling initiatives by some banks, namely Bank of India's Abhay, ICICI Bank's Disha Trust and Bank of Baroda's Grameen Paramarsh Kendras. The counselling centres should be able to take up a case on behalf of the customer, says the RBI draft. "There is a need for credit counselling centres to be empowered for liaising and negotiating with banks on behalf of their customers," it says. Offering credit counselling could be made a part of fair lending code for banks in due course, the central bank said. The menace of recovery agent too can be delt with through the credit counselling centres, finds the central bank. "RBI may sensitise banks to give due consideration to the debt management plan prepared by such FLCCs before resorting to recovery measures," it said. On single-creditor-debts the RBI said, "The FLCCs could assist the borrower in negotiating with the bank concerned. In case of multiple credits availed of by individuals, the FLCCs may negotiate with the bank/s having the largest exposure to restructure the debt and the recoveries to be shared on a pro-rata basis." But their work stops there: "The FLCCs would, however, not involve themselves in recovering and distributing money. This would be left to the bank concerned, or the bank having the largest exposure to act on behalf of all the banks." The step is aimed at bringing in more farmers into the organised borrowing ambit, instead of money lenders, who charge a high interest rate. While in the urban areas, "The aggressive marketing of personal loans and credit cards to vulnerable section of borrowers could also have consequences of over- indebtedness and rising NPAs," RBI said. However, when the banks set up such credit counselling centres there should be appropriate 'firewall' between a bank and the counselling centre set up by it. "Financial education should be clearly distinguished from commercial advice; codes of conduct for the staff of financial institutions should be developed." The draft is open for public comments and suggestions till April 30, 2008. URL: http://epaper.dnaindia.com/epapermain.aspx?edorsup=Sup&queryed=3&querypage=2&boxid=30795012&parentid=61452&eddate=04/04/2008 To unsubscribe send a message to [EMAIL PROTECTED] with the subject unsubscribe. To change your subscription to digest mode or make any other changes, please visit the list home page at http://accessindia.org.in/mailman/listinfo/accessindia_accessindia.org.in
