Credit counselling for borrowers in distress

Filling a vital gap in debt management services, the Sri Lanka Banks' Association is launching a social initiative in the form of a Credit Counselling Centre commencing January 19, 2009. Aptly titled "Upadeshana", the centre will be located at the Central Bank's Centre for Banking Studies in Rajagiriya with services extended at locations in provincial towns.

Borrowers who are facing difficulty with their payments will have a team of specially trained advisors with skill, understanding and knowledge in banking and finance to help them manage their funds and repayments and get back on track.

Their services will be made available free.

"The need for Credit Counselling is being strongly felt in this country and financial management is relevant to both individuals who borrow and institutions that lend", said the Secretary General of the SLBA Upali de Silva.

The service will be a boon for small and medium scale entrepreneurs as well as individuals who have obtained personal loans or credit card facilities without much thought of the practical aspects of paying back.

The "Upadeshana" Centre will help defaulters to review their financial situation and come up with a viable solution to meet their obligations. What they will not do however is to get loans negated or waived. Nor will the Counselling Service make recommendations of various credit schemes on offer.

The service is primarily to get the borrower to re-look at his or her resources and re-channel them in a way that would get the payments and business back on track.

"The service comes at a time where there is global concern about credit and financial stability", said Ms. Siromi Wickramasinghe who will head the Upadeshana Centre.

"The SLBA has the support of the Central Bank as a part of an endeavour to strengthen Sri Lanka's financial services sector."

Assistant Governor of the Central Bank Ms. Rose Cooray, speaking of the need to provide "financial education" for borrowers said: "The Central Bank has identified the concept of credit counselling as a vital step in helping both the membership of the Banks' Association as well as the customers who have obtained credit and find they are unable to pay back, perhaps because their financial circumstances have changed."

Several countries operate credit counselling services to keep defaulting in loan repayments to a minimum.

While Sri Lanka is ahead in banking compared to other Asian countries, till now there has been little help to minimise the defaulting of loan repayments or the misuse of credit card facilities.