The banking and monetary regulator RBI has asked banks to give a new lease of life to financial and credit literacy to the consumers. There was a trend of distressed agricultural and personal loans in 2008-09, which had prompted the RBI to come up with a Financial Literacy and Credit Counseling (FLCC).
This model however didn't pick up as per expectations. RBI conducted a survey of 30 FLCC across 16 states to find out certain limitations.
"The findings of the study indicate the limitations of the model scheme in scaling up the financial literacy efforts in the desired manner," RBI stated.
One of the primary reasons is the awareness, only distressed customers were aware and being counseled. These centres were run by independent trusts, but were in contact with the sponsor bank, and were also working as marketing centres for the bank products.
Since these centres were set up by banks, the farmers, and distressed borrowers were wary of them becoming debt recovery centre.
The new model as per RBI's suggestions would include setting up of Financial Literacy Centres (FLC) at each Lead District Manager's (LDM) office. There would be 630 new FLCs. Further the financial literacy would also be taken up by rural branches of commercial banks and RRBs. The RBI would it would specially prepare material for financial literacy and distribute it to banks.