RBI charts guidelines to set up Credit counseling Centers

RBI stressed on the need of financial literacy as common man does not have proper information about the various financial tools. Indian middle class is falling in debt trap in their want to fund their consumption needs. In such a situation, RBI is thinking of setting up credit counseling centers. These counselors will give sound advice to restructure the debts.

The conditions set up by RBI for banks are:

1) Banks should provide free advice and not try to sell any products

2) Center should be outside the branch and it should maintain an arm's length relation with the bank.

Central Bank may soon set up meeting with the bank's CEOs like Indian Banks' Association, Nabard, cooperative banks, experts and few NGOs to discuss the implementation of the same.

RBI intents that credit counseling should be a part of banks fair lending codes.

RBI specifies that counseling centers should focus on rural areas besides urban areas as needs of the two are different. RBI has advised that public sector banks should focus on the rural areas whereas private banks or foreign banks should concentrate on urban areas.

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