SLBA launches Credit Counselling Service

The Sri Lanka Banks' Association launched the Upadeshana Credit Counselling Centre last week to aid borrowers manage their debt obligations, particularly those who find that their circumstances have changed and are now unable to meet their debts.

The Centre was opened by Central Bank Governor Ajith Nivard Cabraal at the Centre for Banking Studies, Rajagiriya.

A team of specially trained advisors with knowledge and experience in banking and finance will help borrowers in distress to manage their funds and repayments and get out of the credit trap. This much needed service is being made available free at this time and will be available in provincial towns as well.

The head of the centre Siromi Wickramasinghe, said: "There are tempting offers of 'buy now and pay later' and thousands of households find themselves in unmanageable debt. Our service will also be invaluable for small and medium scale entrepreneurs struggling with business loans or individuals who have got into difficulty with personal loans or who have over extended themselves on their credit card dues.

The service assists borrowers manage their finances from a professional perspective in such a manner that the debt is settled and the objectives of both the borrower and the lender are satisfactorily met. This meets an essential need that will help sustain and safeguard the financial services sector."

"Credit counselling is an important tool in ensuring financial system stability. In the process of ensuring financial system stability, regulatory bodies utilise numerous instruments.

In addition to the traditional instruments used, there is an increasing acceptance among regulators that promoting financial literacy is one such instrument.

This has gained strength with the recent international financial crisis. Credit counselling, being an integral part of financial education, would help to create a more knowledgeable set of customers, better lending portfolios, stronger financial institutions and ultimately, a stronger financial system.

Credit counselling therefore goes hand in hand with one of our twin core objectives, financial system stability" said the Chief Guest Governor of the Central Bank Ajith Nivard Cabraal.

The Secretary General of SLBA said, "Financial management is relevant not only to institutions that lend money but also to those who borrow.

Filling this vital gap in debt management services, the Sri Lanka Banks' Association in collaboration with the Central Bank of Sri Lanka is launching this social initiative."

Credit counselling services are popular in many developed countries and help keep default of 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 educate and advise borrowers to help them manage their finances and minimize defaulting in loan repayments or the misuse of credit card facilities.