Page 36 - Banking Finance April 2019

ARTICLE

Y In view of the life expectancy having increased in India, In the present age of technology, the digitisation of financial
we will be needing for money for our old age than our products and services, and the consequent need to
previous generations did. strengthen digital financial literacy has become an important
component of the Indian policy-making agenda. So, now let
Y Too many choices like banks, NBFCs, insurance
companies, Credit card companies are there, all in stiff us look at the efforts made by RBI and NABARD for achieving
the target of financial literacy. Both the funds constituted
competition, creating more and more confusion for an
already lesser educated and lesser informed average in 2008 by RBI-Financial Inclusion Fund and Financial
Indian. Inclusion Technology Fund were merged in 2015.
Y In our country with over 6 lakh villages and about 60% Now multiple efforts are being made by RBI for enhancing
of population still living in rural areas, where even the financial literacy in our country like setting up Financial
general literacy level is low, the importance of financial Literacy centres in banks, putting up FL camps/kiosks in gram
literacy increases manifold. In view of the diverse panchayats, putting up Going Digital camps in Farmer Clubs,
economic and social conditions in India, it becomes all SHGs, JLGs, schools and colleges in semi-urban and rural
the more difficult to combat the behavioural and areas, Dissemination of financial literacy messages through
psychological factors of the rural masses and then make community radio in rural areas, imparting basic financial
them available the formal banking services. education to the rural folks through mobile vans etc. Apart
Y Financial illiteracy puts a burden on the nation in the from the above, continuous efforts are being made for
form of higher cost of financial security and lesser educating the rural people, the significance of cashless
prosperity. Most people resort to investing more in economy and digital transactions through folk media like
physical assets and short term instruments which clearly Puppet-shows, jingles, street-plays, running slides in theatres
conflicts with the greater need for long-term etc. The grant facility is being extended to commercial
investments, both for households to meet their life stage banks, Regional Rural banks and Cooperative baks for
goals and for meeting the country's capital putting up Going Digital camps.
requirements for infrastructure.
The ideal scheme of setting up Financial Literacy Centres
Y The major problems prevailing in our society like (FLCs) in semi-urban and rural areas introduced by RBI in
poverty, domestic violence, crimes and corruption are 2009 is being given a new impetus. During 2016-17, an
attributable to financial problems. With a view to added importance was attached to spreading financial
eliminate above problems, RBI assigned to National literacy, given the skewed distribution and limited reach of
Bank for Agriculture and Rural Development, the FLCs in some states as well as in view of the withdrawal of
gigantic task of securing prosperity in rural areas. legal tender status of SBNs and the push for digital
transactions. A number of initiatives were undertaken, which
Thus, it is more than obvious that the Financial literacy is included conducting a pan-India Financial Literacy and
crucial to help our consumers save enough to provide Inclusion Survey, Pilot Project on Setting up FLCs at the block
adequate income in retirement, while avoiding high levels levels , digital focus in literacy camps, capacity building for
of debt that might result in bankruptcy, defaults and FLC counsellors and rural branch managers and observation
foreclosures. A study conducted by the financial services of Financial Literacy week.
company-TIAA-CREF shows that those with high financial
literacy plans, have double the wealth of people who do not Realising the need for convergence of the efforts of various
plan for future. Conversely, those with low financial literacy, stakeholders, RBI reconstituted its Advisory Committee in
borrow more, have lesser financial resources and end up June 2015. Apart from continuously reviewing the Financial
paying unnecessary fees for financial products. They do not Inclusion Policy, monitoring the progress of financial inclusion
invest, have trouble with debt and a poor understanding of and financial literacy and assessing their impact, it has been
the terms of their mortgages or loans. From banks' view actively involved in the process of formulating the National
point, the efforts made towards financial literacy is the Strategy for Financial Inclusion. NSFI will comprehensively
future investment for them. In a country like India, where present the strategy developed at the national level to
there are large number of small customers, the banks need systematically accelerate the level of financial inclusion and
to look for new and newer business avenues. financial literacy. The proposed strategy pillars for NSFI

36 | 2019 | APRIL | BANKING FINANCE