Govt Policy

RBI wants banks to set up financial literacy centres

Views: 1.2K

The Reserve Bank of India has asked banks to directly set up Financial Literacy Centres (FLCs) in each of the Lead District Manager (LDM) Offices in a time-bound manner.
After RBI came out with the concept of financial literacy and credit counselling centres in 2009, banks set up over 135 credit counselling centres in various states.

To evaluate the efficacy of the scheme and its impact on financial literacy, RBI conducted a sample survey of 30 FLCCs across 16 states. The results indicate the limitations of the model scheme in scaling up the financial literacy efforts in the desired manner.
One of the main problem with these centres, RBI noted, was that few were aware of their existence and the counsellors were advising people who were already reeling under indebtedness. Thirdly, although the FLCCs were run by separate trusts and were to maintain an arm’s length relationship with their sponsor banks, their dependency on the sponsor for funds made this difficult. As a result, FLCCs were distributing product brochures of sponsor banks under the guise of improving financial literacy and they were being manned by agricultural officers of the bank.

According to the RBI study, since the counselling centres were set up by banks themselves, there was a fear among borrowers that they might turn into debt collection units. Under the new scheme, FLCCs would continue to function with renewed focus on financial literacy. However, most of the responsibility has now been passed on to banks. This will lead to opening of 630-plus FLCs in all the districts throughout the country. Further, financial literacy activities will also be undertaken by all the rural branches of commercial banks and regional rural banks. RBI has said that it will prepare financial literacy material on its own and distribute it to banks.

Follow and connect with us on Facebook, Twitter, LinkedIn, Elets video

Eletsonline News
Eletsonline News

Latest News

To Top