Do you need counseling for your loan?

Mohammed (L), 25, holds a paper windmill aloft as he wades in the waters of the Arabian Sea with his son Mortaza and brother Taher in Mumbai September 23, 2011.

Are you tired of paying your loan EMIs and is it taking a toll on your health? Are you a genuine customer who is currently in a financial position which does not let you repay your loans on time? Would you like to share your worries with a well wisher who can, not only lend you an ear, but, maybe also do something to alleviate your problems?

The Banking Codes and Services Board of India (BSCBI) offers a free of cost credit counseling service to individuals who have taken home loans, personal loans, vehicle loans or incurred credit card debt up to a maximum limit of 50 lakh rupees. The service is available only if you have taken a loan from member banks of BCSBI. The list of members, which currently has 80 banks, includes all state banks and most private banks and many co-operative and rural banks. This service is also available to micro and small enterprises.

How to seek BSCBI's help

1. Borrower directly contacts BCSBI

2. Lender refers distressed defaulters to BCSBI

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The customer has to apply to BCSBI using an application form which is available online (here). The customer is then asked to meet a credit counselor of BCSBI who takes into consideration all details and creates a debt restructuring plan if needed. This plan is made in consultation with the bank which has lent to the customer. It must be noted that there is no compulsion that the bank has to accept the plan. The bank is free to reject it or accept it partially or completely depending upon its own views. The BCSBI counselor only acts as mediator.

Confidentiality

All the details shared by customer and bank with the credit counselor are kept highly confidential and customers are welcome to share all details with counselor.

The BSCBI has also encouraged banks to appoint a nodal officer, preferably from the credit department, to ensure that there is high efficiency and commitment in the entire process. This also ensures that the banks views are communicated faster.

Where and when

The only limitation of this process is that the counseling currently happens only in Mumbai on all working days from 10 a.m. to 2 p.m. But customers can apply online to get a prior appointment.

The borrower has to give a self attestation that the issue is not under arbitration in any other forum or court or arbitrator while filling the form. If such a case exists the counselor will not entertain the request for counseling.

Customer's duty

The customer is expected to provide correct details regarding his current financial status including asset details, income details, and monthly expenses apart from the complete details of the loan under consideration. The counselor will also expect to get a clear commitment by the customer in order to decide on the restructuring.

Conclusion

This service is to help in debt restructuring, not a waiver on repayment. Also, there is no compulsion on either parties (customer or bank) to accept the recommendations of the counselor.

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