In India, the Literacy rate is about 74.04 % whereas consistent with a survey conducted by Standard & Poor’s Financial Services, but 25 % of South Asian countries’ adult population is financially literate.
According to the report conducted by the worldwide Financial Literacy Excellence Center, only 24% of the Indian adult population is financially literate. As compared to other major emerging economies, the financial literacy rate of India is that the lowest. This is often due to inter-state disparities, lack of formal training and awareness. While other emerging economies have better financial literacy rates than India, still there’s a scope for more improvement.
Tables 1 and 2 represent State and Union-Territories wise levels of financial literacy in India. Metropolitan regions like Maharashtra, Delhi, and West Bengal have financial literacy rates of 17%, 32%, and 21%, respectively. States like Bihar, Rajasthan, Jharkhand, and Uttar Pradesh where poverty is widely spread have significantly low literacy rates. The data identifies inter-state disparities. While Goa has the very best literacy rate of fifty, Chhattisgarh is lacking financial education and has a rock bottom literacy rate of 4%.
According to a survey conducted by Streetfins:
• Only 27% of the students are taught about Financial literacy and management in their schools.
• Only 53.8% have a bank account.
• 53 % of the population was unaware of the Credit Bureaus and Credit Scores.
• 85 % of the respondents weren’t aware of their credit scores.
• 30 % of the respondents felt that they do not have quick access to loans.
• 53 % of the population residing in these top Indian cities didn’t even skill access to credit facilities will have an impression on their financial goals.
What is Financial Literacy?
Financial literacy is that the ability of an individual to form efficient decisions associated with money. Having access to information and therefore the skill sets required for effective use of this information in making decisions is a component of the concept of financial literacy.
And these decisions are critical to assist people in their quest to become financially free over a short time. Therefore, financial literacy also can be termed because of the capacity of a person to form informed decisions concerning to gain financial freedom.
Why Financial Literacy is important?
• In our country, many fraud practices and scams happen because people are unaware of varied schemes so it’s necessary to form each citizen conscious of such scams.
• Many people don’t save their money and don’t keep track of their expenses which leads them to miserable lives. So financial literacy will help them to stay track of their expenses and budgeting.
• Many people don’t know the difference between Saving and Investing, which is that the reason they don’t skills to utilize their money properly. Henceforth, financial literacy will help them to know the difference.
• Many people find themselves giving more amount than claimed while repaying the debt which may be a major issue.
• In rural areas, there are various issues due to financial illiteracy.
Government Initiatives to enhance Financial Literacy:
The government has taken various measures to enhance the Financial Literacy rate in India their objectives are as follows:
i. To promote financial literacy concepts among the varied sections of the population through financial education to form it a crucial life skill
ii. Encourage active savings behavior
iii. Encourage participation in financial markets to satisfy financial goals and objectives
iv. To develop credit discipline and encourage availing credit from formal financial institutions as per the requirement.
v. Improve the application of digital financial services in a safe and secure manner
vi. Managing risk at various life stages through relevant and suitable insurance policies.
vii. Plan for adulthood and retirement through coverage of suitable pension products.
viii. To make aware of rights, duties, and avenues for grievance redressal.
ix. To improve research and evaluation methods to assess the progress in financial literacy.
Following are the government organizations that are working to enhance Financial Literacy and Awareness among the citizens:
NCFE creates financial awareness and authorization by providing money education campaigns across the country for all sections of the population through seminars, workshops, conclaves, coaching programs, campaigns, discussion forums by itself or with facilitate of establishments, organizations, and provide coaching in financial education. It makes and distributes workbooks, worksheets, literature, pamphlets, booklets, flyers, technical aids. NCFE prepares appropriate financial literature for the target-based audience on financial markets and financial digital modes for improving financial literacy so on improve their knowledge, understanding, skills, and competence in finance.
Basic Financial Education: NCFE is conducting financial education campaigns through financial education schemes and they are as follows:
a. Money Smart School Program (MSSP) is a tutorial year program where schools voluntarily implement financial education as a part of the school curriculum.
b. NCFE– National Financial Literacy Assessment Test (NFLAT) may be the first quite national level test, conducted by the NCFE, to live the extent of financial literacy among school students.
c. FETP is an initiative for providing unbiased personal financial education training to high school teachers to facilitate the inclusion of monetary education in-class curriculum. With the success of NFLAT, there was a requirement to coach the varsity teachers within the areas of monetary education so that they successively can conduct classes and help school students acquire basic financial literacy skills.
d. FACT (Financial Awareness and Consumer Training) is a program by NCFE to provide financial education to young graduates and postgraduates, on topics relevant to them, which can positively impact their financial wellbeing.
e. Financial Education Program for Adults (FEPA) may be a new initiative started by NCFE. FEPA is aimed toward providing basic financial education to the adult section of underserved areas of India, especially rural India.
Basic Financial Education: RBI has prescribed the subsequent content for basic financial education:
a. RBI prepares the Financial Literacy guide, Financial Diary, and set of 16 posters.
b. Special camps booklet prepared by NCFE for people newly inducted into the economic system which captures the elemental tenets of monetary wellbeing like savings, borrowings, the concept of interest and compounding, etc.
Sector Focused Financial Education:
The content covers relevant topics among the banking sector like ATMs, payment systems like NEFT, UPI, USSD, awareness regarding sachet portals, keeping off from Ponzi schemes, fraud emails/calls, KYC, effort Credit Discipline, Business Correspondents, etc. A Financial Awareness Messages (FAME) booklet comprising of 20 messages for the overall public and five Posters on financial literacy for the Financial Literacy Week are made available on the Financial Education webpage of RBI’s website.
Public Awareness Campaign
• RBI’s Twitter handle ‘@RBI’ tweets posts regarding important press releases, statements, regulatory guidelines, speeches, clarifications, and events, and videos are relayed on RBI’s YouTube link. A separate Twitter handle ‘@RBI says’ and Facebook page ‘RBI Says’ publish messages and knowledge of interest for greater awareness and understanding of the Bank’s functions.
• The campaigns are done regularly in newspapers, TV, Radio, Cinema, Digital channels, SMS, and hoardings, under the tagline ‘RBI Kehta Hai’.
• A unique feature of the general public awareness campaign is that the missed call element: upon giving a missed call to the amount 14440, the caller will receive information through a pre-recorded Interactive Voice Response System.
Basic Financial Education: SEBI has undertaken the subsequent initiatives for basic financial education:
a. Financial Education through Resource Persons Program to impart financial education to the general public. The eligible individuals trained and impaneled as RPs (in districts) by SEBI can conduct free workshops within the local language and are paid an honorarium. The essential concepts of finance, banking, insurance, pension, and investments are covered across five Target groups (viz. Home Makers, Self-Help Groups, Executives, Middle-Income Groups, Retired personnel). During the workshops, they distribute free financial education booklets.
b. Financial Education Booklet covering basics of concepts like Financial planning, Savings, Investment, Insurance, Pension, Borrowing, Tax saving, caution against Ponzi schemes, Grievance redressal, etc
Sector Specific Financial Education:
SEBI has the subsequent initiatives for sector-focused financial education:
a. SEBI recognized Investors’ Associations organize Investor awareness programs.
b. Regional Seminars in association with Exchanges/Depositories
c. Commodity awareness programs by SEBI recognized Commodity Derivatives Trainers 37 additionally to the above.
SEBI has also undertaken the subsequent initiatives:
• Participation in World Investor Week in association with the world organization of Securities Commissions (IOSCO). Meaning to highlight the initiatives taken by various financial market regulators within the direction of conducting investor protection and education awareness activities, IOSCO has been organizing per annum a weeklong global campaign mentioned as World Investor Week (WIW). SEBI participated in IOSCO WIW by organizing various financial literacy and investor awareness programs during the week across the country.
• Dedicated Investor Website: a fanatical website http://investor.sebi.gov.in is maintained for the advantage of investors. The website provides relevant educational awareness material and other useful information. Further, schedules of varied investor and financial education schemes also are displayed on the website for the knowledge of investors.
IRDAI possesses a pan India survey on awareness levels about insurance administered through the NCAER during a bid to enhance its strategy of making insurance awareness.
Some of the most initiatives administered by IRDAI are listed below:
• Conducts seminars, awareness campaigns, Metro Rail campaigns, quizzes, etc.
• Policyholders website launched ‘Young Corner’- an interactive six-game featurette. A Hindi version of the online site was also launched to increase its reach
• Print campaign cautioning the general public about the misleading callers and fake offers was dispatched. 12 vernacular dialects comic books were delivered on Insurance.
• Handbooks on Insurance like Employment opportunities in Insurance for students; Crop Insurance, right buying, etc., were launched
• Pan-India campaign against spurious callers through TV Commercials and Radio jingles on the utility and benefits of various kinds of insurance in five regional languages 39
• PFRDA has launched a fanatical website called “Pension Sanchay” in 2018. Through this website, PFRDA aims towards addressing the necessity for financial literacy from the attitude of retirement planning. The content of the website has been designed to keep in view the four most vital concepts in financial deciding knowledge of interest rates, interest compounding, inflation, and risk diversification.
• PFRDA conducts subscriber awareness programs through its central record-keeping organizations at better places across India.
• PFRDA also has empaneled a fanatical training agency for creating subscriber awareness and capacity building regarding the NPS and APY. Additionally, to the above, PFRDA also conducts Annuity Literacy Program in co-ordination with NPS Trust and Annuity Service Providers for creating subscribers conscious of the various annuities available to them.
Creation of Financial awareness amongst the agricultural masses through various media in Hindi, English, and vernacular languages. (Printed materials like leaflets, posters, books/booklets on financial literacy initiatives; jingles associated with financial inclusion eg. opening of bank accounts, SHG savings, Swarojgar Credit Cards, etc., were aired and animated films on loans, budgeting, and usage of ATMs hosted on our website also as YouTube channel)
• Conduct Financial Literacy Awareness Programmes (FLAPs) targeted at people that are newly inducted within the economic system, Adults, Farmers, School Children, Senior Citizens, SHGs, and Entrepreneurs besides financial education for rural people of differing types of digital payments.
• Conduct of FLAPs with Mobile Demo Vans fitted with Audio-Video instrumentality, ATM, Micro-ATM and handholding for conducting digital transactions (new point)
• Extended support to Rural Self Employment Training Institutes (RSETIs)/ Rural Development & Self Employment Training Institute (RUDSETI) to accumulate training equipment for livelihood training.
Shreya has completed her Graduation in Statistics and currently pursuing her Master’s in Finance from the University of Mumbai. Shreya is a founder of askfinanceguru.com where she posts content related to Finance and management where her motto is to make people financially literate. She has also worked with Finlatics for Financial markets research and Portfolio management live project. She is a learner, She loves to connect with people and seek knowledge from them. She is a hardworking and determined person.