RBI moots counselling borrowers to spread financial literacy
04 April 2008
Mumbai: The Reserve Bank of India (RBI) today placed on its website, a concept paper on financial literacy and credit counselling centres for public comments.
The paper, which has three parts, deals with matters relating to financial literacy, credit counselling and an outline of a suggested scheme for financial literacy and counselling centres. The central bank has invited comments and suggestions on the concept paper latest by 30 April, 2008.
The working group to examine the procedures and processes of agricultural loans, whose chairman C P Swarnkar had been appointed by the Reserve Bank, had recommended in its report in April 2007 that banks should actively consider opening counselling centres, either individually or with pooled resources, for credit and technological counselling.
Another working group, constituted by the Reserve Bank to suggest measures for assisting distressed farmers under the chairmanship of S S Johl had also suggested that financial and livelihood counselling are important for increasing viability of credit.
Basis the recommendations of these two working groups, the Reserve Bank had in May 2007 advised all the state level bankers committee (SLBC) convenor banks that they may initiate action to set up a financial literacy and credit counselling centre (FLCC) on a pilot basis in any one district in the state / union territory coming under their jurisdiction.
A statement by the RBI says that several banks have since taken initiatives in opening credit counselling centres in the country.
During its mid-term review of the annual policy for 2007-08, the Reserve Bank had stated that a concept paper on the subject would be prepared and placed on its website for feedback in order to take this initiative forward.
Recently, in his Budget speech for 2008-09, finance minister P Chidambaram had indicated that individuals such as retired bank officers, ex-servicemen, etc., would be allowed to be appointed, among others, as credit counsellors. The concept paper on financial literacy and credit counselling centres has been prepared and placed on the website in this context.