What is Credit Counselling?

Credit Counselling means educating individuals to assess their credit demand and debt management in order to mitigate financial crisis.

Credit Counselling will be both preventive and curative.

  • Preventive Counselling will include- Bringing awareness regarding cost of credit, availability of backward and forward linkages, etc.. need to avail of credit on the basis of customers’ repaying capacity.
  • In case of curative counselling the credit counselling centre will work out individual debt management plans for resolving the unmanageable debt portfolio of the clients by working out effective debt restructuring plan in consultation with branch of the Bank, taking into account income and size of the loans.
  • For single-creditor-debts: The Counselling Centres could assist the borrower in negotiating with the Bank concerned. Counselling Centres may call for a joint meeting with the concerned bank/banks for putting forward their concerns/proposals for restructuring of debts. The Bank/s on review of the recommendations / proposal made by the Counselling Centres, may take their independent and informed decision to accept the proposal in its original form or in such other modified form as deemed fit.

The Counselling centre would, however, not involve themselves in recovering and distributing money. This may be left to the bank concerned, or the Bank having the largest exposure to act on behalf of all the Banks.