The Full Form of FLCC is‍ Financial Literacy and Credit Counselling.

In the light of the various aspects/issues outlined in Part A and Part B above, and in order to make credit counselling more effective and popular, a scheme for setting up of FLCCs is suggested:

Objectives

36. The broad objective of the FLCCs will be to provide free financial literacy/education and credit counselling. The specific objectives of the FLCCs would be:

(i). To educate the people in rural and urban areas with regard to various financial products and services available from the formal financial sector ;

(ii). To make the people aware of the advantages of being connected with the formal financial sector ;

(iii). To provide face-to-face financial counselling services, including education on responsible borrowing and offering debt counselling to individuals who are indebted to formal and/or informal financial sectors;

(iv). To formulate debt restructuring plans for borrowers in distress and recommend the same to formal financial institutions, including cooperatives, for consideration ;

(v). To take up any such activity that promotes financial literacy, awareness of the banking products, financial planning and amelioration of debt-related distress of an individual; and

(vi). To take up any other activity that facilitates the above.

FLCCs should not, however, act as investment advice centres.

37. Debt counselling/credit counselling can be both preventive and curative. In case of preventive counselling, the centre would provide awareness regarding cost of credit, availability of backward and forward linkages where warranted, etc. The clients would be encouraged to avail of credit on the basis of their repaying capacity. Preventive counselling can be through the media, workshops and seminars. In the case of curative counselling, the clients may approach the counselling centres to work out individual debt management plans for resolving their unmanageable debt portfolio. Here, the centre could work out effective debt restructuring plans that could include repayment of debt to informal sources, if necessary, in consultation with the bank branch.

38. While the FLCCs centres would provide financial literacy and credit counselling, the activities of the Rural Development and Self employed Training Institutes (RUDSETI) towards skill development/capacity building could be dovetailed with FLCCs initiatives, for increasing the earnings/debt repaying ability of the distressed borrowers’ families.