The common person has been left far behind as complexities of financial products increase. Financial counselling is the need of the hour in our country

The financial landscape has changed. It is not simple anymore. The common person who has difficulties in understanding the complexities of financial products but, at the same time, cannot help availing them for the sake of survival has, no doubt, been left far behind the pace of development. The rapid advancement in information and communication technology, the advent and range of complex hi-tech asset-liability products, innumerable number of insurance and mutual funds schemes have changed the traditional face of the financial sector. There has been a tremendous increase in the speed and quality of banking services. Financial transactions, or for that matter, practice of banking has existed in some form or the other from time immemorial and will continue to remain as long as the human race exists However, the digital divide is so wide that every household is caught in this vortex and many of them simply carry on helplessly. Therefore, it is imperative to address the concerns of the common man. In such a scenario, financial counselling can play a major role in bridging the gap.

The concept of inclusive growth for a country as a whole has now become a global phenomenon. On the supply side, we have put in place a sound financial system that has the capability to cater to all segments of society. However, inclusive growth is not possible without financial inclusion i.e. provision of banking services at affordable costs to the unbanked segment of population, which has so far been excluded from such services. Unless we are able to create a demand for it, the financial system so established over the years will, sooner or later, collapse. On the demand side, financial inclusion through the provision of financial literacy, financial education and qualitative customer service is the only way to supplement the supply side. Although the Indian economy has grown steadily over the last two decades, its growth has been uneven among different geographic regions, rural and urban areas, social groups and economic classes. A third of the global poor reside in India. The benefits of economic growth have not been equitably shared among the various classes of population. The standards of living among various segments of population show glaring disparities. Given the present context, financial counselling becomes crucial for creating necessary demand for financial products and services among the people left behind, creating awareness among them about their rights as consumers and instilling in them trust and confidence in the system with a view to ultimately improving the quality of their lives. Financial Counselling is one of the means to the end.

The term counselling is much misunderstood. Some people think that counselling is needed for those who are weak or crazy. Particularly in our country, it is commonly associated with psychiatric treatment or those whose performance in the school, college or workplace is not found to be satisfactory. Such people are living in a denial mode. Showing openness to change and willingness to look forward is nothing but a sign of strength. The clients learn new skills and learn to help themselves. When you fall sick you go to a physician who diagnoses and prescribes the treatment for prevention or cure. Similarly when you are confused before availing a product or facing financial crisis after availing a product or in debt trap, you are said to undergo financial ill-health. You, then, need diagnostic financial counselling. Like healthcare, financial counselling process comprises both preventive and curative counselling.

Financial counselling means providing financial literacy, financial education, credit counselling and debt management for those in financial distress i.e. guidance on personal financial management—budgeting, saving and credit issues/debt management and managing money for a secure future. It is important to know that saving leads to investment and asset creation. Appropriate asset allocation leads to wealth creation. By savings alone one cannot meet all current and future needs, which also depends upon the given lifestyle. Thus, counselling is essentially for livelihood and mitigating financial distress is part of the process.

The counselling process enables customers to take informed decisions before availing a product or service. Hence, there is less scope for grievances. Lenders can then gainfully utilise the resources earmarked for the grievance redressal mechanism. As a customer resorts to responsible borrowing, it results in viability of credit for the lender. Similarly, customers would be more comfortable in dealing with non-partisan counsellors rather than lenders themselves for the purpose. If lenders tend to accept the suggestions made by the counsellors, then the customer’s debt burden is mitigated and at the same time the lender can avoid the burden of handling a possible bad asset or dispute. Thus, counselling is advantageous to both the customers and the service providers.

Meanwhile, the counsellor’s objective should be customer-centric because the relationship between the customer and bank is based on an unequal contract. The counsellor is expected to listen to the customer and show signs of understanding of his problems with a view to winning over his trust, so that he comes forward to share all the facts and circumstances of any underlying issue. Otherwise, the whole exercise would become futile. This is all the more important because the counsellor would get only the customer’s version of the story. The counsellor has to constantly remember that his mission is only to guide the customer, and not attempt to directly or indirectly resolve any dispute between the bank and the customer as the line of demarcation—between where the process of counselling stops and that of grievance redressal starts—is very thin. Promoting a product or showing bias towards any service provider is not within the framework of the scheme of things. He is unbiased. A counsellor should not indulge in full-scale investment counselling since it is limited or incidental to budgeting and saving for a secure future in regard to the targeted segment. Further, it is distinct from investment counselling which is prohibited under the present regulations. A counsellor is just a facilitator.

Overall, the counselling process would contribute immensely in building customer confidence as well as improving the efficiency of the delivery channel which are supplementary to each other. Financial counselling is at its nascent stage. We have to create awareness about the concept among the common people. And its wide acceptance depends upon how it is offered, sought and delivered. Further, the beneficiaries should be able to appreciate the benefits derived. Thus, financial counselling may perhaps become the key-differentiator in the realm of possibilities.

About DISHA: As part of corporate social responsibility ICICI Bank has set up DISHA Trust under the aegis of ICICI Trusteeship Services Ltd. The Trust has established as many as nine DISHA Financial Counselling Centres across the country. They are manned by ex-bankers who have rich banking experience for over 20-25 years. The thrust area of counselling would be on medium and low-income individual customers who do not have the ordinary means to know or wants to know the details of a product or those who are having budgeting problems and worried about their financial future or when they are facing problem of repayment of a loan or any other debt. The customer will really benefit only if he is willing to share with the counsellor all the facts leading to his financial crisis. The DISHA counselling process is unbiased, personalized, non-judgemental, confidential and free of cost and it is done with the involvement of the customer. ICICI Bank’s initiative is for serving all customers across banks.

DISHA Financial Counselling has a tie-up arrangement with Moneylife Foundation (both non-profit entities) to spread financial literacy and to provide free counselling for those who are in need of financial education and credit counselling. Those who want to avail free financial counselling may contact the following centres for appointment.