Financial and Livelihood Counselling

Financial and Livelihood Counselling is also called as Credit Counselling or Debt Counselling. In India, RBI as well as many Banks and NGOs are working for the well-being of the distressed customers in the formal and informal financial sector.

Debt Counselling can be called as'counselling that explores the possibility of repaying debts outside bankruptcy and educates the debtor about credit, budgeting, and financial management'.

Debt Counselling primarily focuses on the immediate financial problems and thereafter as to the awareness as to the cost of funds and utilization of credit optimization of the available source of funds, and finally to encourage the distressed people to access the formal financial system once again.

Financial and Livelihood Counselling further focuses on the financial education programs.Organisation for Economic Co-operation and Development ( OECD) has defined financial education as" the process by which financial consumers / investors improve their understanding of financial products, concepts and risks, and through information , instruction and / or objectives to develop the skill and confidence to become more aware of financial planning as a consumer or investor to improve their understanding of financial products , concepts , risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being. 

Financial Literacy enables an individual to enhance the ability to know, monitor , and effectively use financial resources to augment the well-being and economic security of oneself , one's family and business ; and finally towards the economy.

The challenges of the household cash management system herein is to balance the available resources and to make a proper choice between various financial intermediaries like Banks, NBFCs, Chit Companies, MFIs, Co-operative Banks and Societies, and individual Money Lenders with available set of skills or information.

Debt Counselors can help their clients to find realistic solutions to their problems and agree on re-payments that are probable and possible ; and counselling is kept confidential.

Debt Counseling services are generally offered free by Banking Institutions sponsored formal agencies and other agencies for a very nominal charge , so that no undue additional burden is put on the already indebted customer.Debt Counseling can be either preventive or curative. In case of preventive counseling , awareness regarding cost of credit, availability of schemes, and method of operations e.t.c is informed or shared. In the case of curative counseling , the clients may approach the counseling centers to work out individual debt management plans for resolving their unmanageable debt portfolio.

Institution sponsored credit counseling center like ABHAY Counseling Center ( sponsored by Bank of India) ; Disha Trust ( sponsored by ICICI Bank), and Grameen Parmarsh Kendra ( sponsored by Bank of Baroda) are functioning as per RBI norms in India, and as per RBI circular as to Financial Literacy and Credit Counseling Centers. These centers would work out effective options for re-scheduling / re-agreement debt, and take over possibilities and debt re-structuring plans that could include flexible mode of re-payment. The role as to NGOs and professional counselors are expected for a genuine difference in Financial and Livelihood Counseling for making the livelihood of distressed customers HAPPY.