What are the types of services Disha offers?
We offer three services. One, financial education. In the last 10-20 years, a lot of new bank products have been introduced. But customers are not well-versed with them. Many customers walk into our centres to know the precaution they should take before handling such products. For instance, a housing loan or credit card. Two, credit counselling. We advise how to handle credit, such as a loan or credit card debt. Three, we offer debt management services.
Is the service restricted only to ICICI Bank Ltd customers?
It’s not just for ICICI Bank customers. We have centres across the country and cater to thousands of people. The service is free of cost.
S. Gopalakrishnan, senior counselor, Disha Financial Counselling
When is the right time to seek professional help as far as debt management goes?
If you have multiple credit cards and paying only the minimum amounts due, it means you are heading towards a debt trap. Then, if you are unable to pay utility bills on time, you should approach Disha. We will show you how to prioritize bills. Also, if a debt-collecting agent frequently calls you for payments, you are definitely heading towards a debt trap.
Credit cards should be used in case of emergency or when it’s absolutely essential since there is no point paying the high interest. If you use a credit card for household expenses and are unable to make payments, it shows something is wrong. Lastly, and most importantly, if you roll over loans from various lenders, there is a problem.
What should one do if a debt collector is harassing him?
Firstly, what is harassment? Asking somebody to repay a loan is not harassment. Making calls at odd hours and abusive calls is harassment. The point was well noted by the Reserve Bank of India (RBI) in a circular, stating that recovery agents can’t call debtors at odd hours and can’t shout at customers. In short, RBI came up with guidelines and agents are given training and certification (on how to handle recovery cases). In spite of this, if the customer feels that he is being harassed, he should file a complaint with the bank. If within 30 days, he does not get a reply or does not get a satisfactory reply, he can go to the banking ombudsman. If the ombudsman thinks the customer is being harassed, heavy penalty can be levied on the bank.
Give a step-by-step process of getting out of debt.
If someone has multiple debts, the first step is to prioritize debt. Those with the highest rates of interest should be retired first. For instance, a loan on a credit card with a 36-40% interest rate or a private loan at 120% should be paid first.
Many banks lend against assets such as gold and National Savings Certificates at cheaper rates. Taking a cheaper loan, say a loan against gold for 14% and paying off the (expensive) 40% interest rate loan makes sense. This way the monthly commitment comes down steeply. The last and most important thing is to gather courage and discuss the issue with one’s family. Take a loan from them (which is at a zero interest cost) and repay the debt and pay back the family member without fail later.
What’s the average time frame to get out of debt?
Of the people who have come to us so far, about 50% have been able to come out of their debt within six months. Another 25% have come out after a year and some have taken two years.