Are you stuck with a home or personal loan and are unable to keep up with the equated monthly installments (EMIs)?
Have you been defaulting on your credit card payments not knowing the way interest adds up on your card? If yes, then there is more help at hand now. The Banking Codes and Standards Board of India (BCSBI) an autonomous body, has set up a credit counselling centre in Mumbai. At least three banks have credit counselling centres of their own.
Bank of India was the first to set up its credit counselling centre, under the banner ‘Abhay’. ICICI Bank runs its credit counselling centre as Disha and Bank of Baroda has set up Baroda Grameen Paramarsh Kendra to cater to rural masses, helping them to solve financial problems and making them financially literate.
The Reserve Bank of India (RBI), in a concept paper issued in April 2008, said credit counselling serves three purposes. “First, it examines the ways to solve current financial problems. Second, by educating about the costs of misusing a credit, it improves financial management.
Third, it encourages the distressed people to access the formal financial system,” the concept paper said. Initially, the RBI was mulling a proposal of asking each bank to set up a credit counselling centre. But to avoid a conflict of interest a common credit counselling centre has been set up to start with in Mumbai.
K J Udeshi, chairman of BCSBI, said, “Instead of each individual bank providing a credit counseling centre the board will be setting up a credit counseling centre to serve customers of all member banks.”
Here, we answer some common questions about the center and its process:
What problems can the counselling centre look at?
The BCSBI centre, which started operations from October 1, will suggest ways for applicants to get out of their debt trap. It may even act as the middleman between the bank and the applicant for finding a mutually-acceptable solution. However, the problem being presented to the credit counselling centre should not have seen a judgement being passed by any other forum, court or through an arbitrator.
The centre will also look into the problems of retail, micro and small enterprise customers of any bank that is a member of BCSBI. At present, the group has 79 members, and more may follow as BCSBI has opened its doors for co-operative banks as well.
Can you go to them directly?
Yes. You can seek help from BCSBI’s credit counselling centre directly. Member banks may also recommend their customers to approach the centre. However, BCSBI says it won’t take up the case of willful defaulters, who don’t want to clear the bank or credit card loans even though they can.
How do you go about it?
The BCSBI has a prescribed format in which the problem faced should be shared with the centre. Applicants will have to mention details such as monthly earnings of the entire family, monthly expenses, house rent paid each month if any, details of credit cards and loan dues that are pending and the reason that has affected repayments.
The form also asks for assets such as deposits, savings or property, etc that the family possesses. Don’t be wary about disclosing such details — the counsellor needs these to suggest measures to help you get out of your debts. BCSBI has also said the centre would maintain confidentiality of information of the borrowers.
Where should the counselling form be sent?
The credit counselling centre operates out of the Bandra Kurla office of BCSBI. The form can be addressed to The Banking Codes and Standards Board of India, Reserve Bank of India Building, C-7, 4th Floor, Bandra Kurla Complex, Mumbai - 400 051.
The BCSBI office can be reached by calling 022 - 26573715, 26573724 of sending a fax at 022 - 26573719.
What is the cost?
There is no cost for seeking help from the counselling centre.
What documents are needed?
Along with the counselling request form, applicants must also submit a copy of their latest salary slip, as well as that of their spouse, if employed. Also required are copies of the rent receipt in case of rented accommodation, the latest credit card or loan account statements and the copies of deposit receipts if placed with the bank. Applicants who have had any communication with the bank over repayment of dues should carry the same along as well.
What if you are not happy with the recommended solution?
BCSBI mentions in the counselling request form that the advice tendered by the counsellors will be recommendatory in nature and will not be binding on the counsellee or the bank which has extended its credit facility.
Will there be centres in other locations?
More centres will be launched in the country. “There is a plan to set up counselling centres in each district. It would be set up by State Level Bankers’ Committee,” M V Nair, chairman and managing director of Union Bank of India, also chairman of Indian Bank’s Association, told DNA.
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