Credit Counseling in India: Where to Get Free Help and When You Need More

Credit counselling is advice from a trained counsellor on managing your debts: a budget, what your credit report says, and which repayment route fits. In India, credit counselling is available free of charge through bank-sponsored Financial Literacy and Credit Counselling Centres (FLCCs) operating under the RBI's 2009 model scheme. Centres for Financial Literacy (CFLs) also provide financial education and related support. Confirm the services available at your local centre before visiting.

Credit counselling in India is a free service where a trained counsellor helps you make sense of your debts. It covers a budget, a reading of your credit report, and a view on which repayment route suits you.

The RBI's 2009 Model Scheme aims to provide free financial literacy, education and credit counselling. It distinguishes between preventive counselling, which helps people manage their finances before serious repayment difficulties arise, and curative counselling, which supports borrowers who are already experiencing repayment problems.

The centres are run by trusts or societies that banks set up, singly or jointly. Serving bankers are not meant to sit on the board.

Credit counselling centres focus on financial education, debt management and repayment guidance. Under the RBI's 2009 Model Scheme, centres should operate independently of their sponsoring banks and must not use counselling sessions to promote the parent bank's products. Their services should be distinguished from investment advice, insurance sales and debt recovery.

For a short definition on its own, see our page on credit counseling meaning.

There are three main sources, plus private counsellors.

Bank-sponsored FLCCs. Three examples, named as information and not as a ranking: Abhay (Bank of India), Disha (ICICI Bank), and Saarthee, which is Bank of Baroda's network of Financial Literacy Centres. Read how Abhay credit counselling works.

What changed in 2012. RBI surveyed 30 FLCCs. It found they were all in urban and semi-urban areas and could not keep an arm's-length distance from their sponsor banks. It told lead banks to set up Financial Literacy Centres (FLCs) at every Lead District Manager's office, with a renewed focus on literacy. Older FLCCs carried on.

Today's network. RBI's Centres for Financial Literacy (CFL) project began as a pilot in 2017. By 31 March 2024 there were 2,421 CFLs covering 7,225 blocks. Our guide to financial literacy and credit counselling centres covers the detail.

Private counsellors also exist, and they usually charge. See how to check one in our guide on how to choose a credit counseling agency.

Bring your loan statements, card bills, salary slips and your credit report. If you are unsure how to read the report, see our guide on how to read a CIBIL report.

A session usually runs in three steps.

• A budget. The counsellor lists your income, expenses and every EMI.
• Your credit report. You go through it entry by entry.
• A plan, if you are already struggling. Under the 2009 scheme, the centre can draft a debt restructuring plan and recommend it to your lenders. The bank decides whether to accept it. If it says no, it should give reasons in writing.

The same scheme sets limits. The centre does not collect or pass on money for you, and it does not take up cases of wilful defaulters.

That answers how credit counseling works in practice: it advises and proposes. It does not negotiate on your behalf, and the final decision always sits with the lender.

The cost. The RBI's 2009 Model Scheme specifies that counselling and debt management services covered by the scheme should be free of charge to customers. Private counselling providers may charge fees, so confirm the cost and scope of services before booking a session.

Your CIBIL score. A counselling session is not a loan, a repayment or a default, so lenders do not report it to credit bureaus. Your score moves on what happens next. If a bank agrees to restructure your loan, the account can be reported as restructured. If repayments are missed, that shows as days past due.

So credit counselling does not harm your score on its own, but the actions that follow it can change your report. Read how loan restructuring under RBI rules is reported.

We do not promise "no impact", because the outcome depends on what you and your bank agree.

Counselling is enough when:

• You are paying your EMIs on time.
• No recovery calls have started.
• You mainly need a budget and a clear view of your report.

You need more when:

• Several EMIs on different dates are eating most of your salary.
• You can no longer pay at all.

A counsellor can propose. A counsellor can't combine your loans or agree a settlement for you. That is the dividing line between credit counseling and a debt resolution service.

For the full side-by-side with settlement, read credit counseling vs debt settlement. We keep this section short on purpose.

FREED is not a credit counselling centre and does not replace one. If you need a budget or an explanation of your report, a free centre is the right first stop.

If you are still paying and your credit score is 700 or above, the Loan Consolidation Plan combines eligible unsecured loans into one EMI. FREED charges the customer nothing for it.

If you truly cannot pay, settlement is the other route. Settlement is not something a borrower chooses out of preference. FREED negotiates with lenders and can reduce what you owe by up to 50%*. The "Settled" status can stay on your report for up to 7 years. There is a non-refundable evaluation fee. See the debt resolution programme.

If you are getting abusive recovery calls or unannounced agent visits, FREED Shield helps, and it is open to everyone. FREED does not handle secured loans such as home, car or gold loans.

*Terms apply. Outcomes vary by lender and case.