The Reserve Bank of India is certainly not short on ambition with its draft strategy for financial education for consumers. The discussion paper, now thrown open for public comments, recognises the important role financial literacy and financial education play in promoting financial inclusion and inclusive growth. As a first crucial step towards reaching those important national goals, the draft paper discusses ways of creating awareness and educating consumers on access to financial services, availability of various types of products and their features. The strategy makes a strong pitch for conditioning the changing attitudes of consumers so that the knowledge gained through financial education is translated into responsible consumer behaviour. Finally, consumers of financial products need to be made aware of their rights and obligations. The RBI’s approach to financial education is in line with those of many other countries which, especially since the beginning of this century, have realised the full potential of spreading financial literacy through national projects. Given the large number of stakeholders, including the Central and State governments, banks and financial institutions, a coordinated national project rather than piecemeal approaches at different levels will be more beneficial.
Financial inclusion, by itself, is one of the top policy priorities of the government. It is also an essential part of the larger social inclusion agenda. Financial education will help in promoting knowledge and skills which a relatively youthful population needs to avoid the pitfall of reckless spending through, say, the indiscriminate use of credit cards, a habit vigorously promoted by irresponsible marketing schemes. Financial education in that sense is akin to the investor education programmes conducted by the Securities and Exchange Board of India and affiliated investor associations. Such initiatives have not had the impact hoped for. One hopes that the national level financial education programme starting at the primary school level will make up for the shortfalls in the sector specific programmes. Financial education will have a positive, multiplier effect as ordinary citizens get to know the nuances of savings and investment. In turn, there will be a welcome deepening of the financial markets. While the RBI’s draft paper is comprehensive, what is missing is a recognition of the existing skills shortage in the financial sector and the steps to be taken to overcome this basic problem. For the financial sector, the biggest challenge is to train and retain manpower for not only its more traditional functions but also to further highly desirable social goals such as financial education.
Keywords: financial literacy, financial education, RBI, financial sector
Commendable ponder by SEBI to enforce Financial education for consumer. It will surely help those people who don't have much knack in financial field. As India is a developing country, so it is imperative that each person has knowledge about those schemes which comes under financial education. India has been working on Financial inclusion - a scheme which aim to join each person of the country with banking - for a long time but yet it will take a lot of time to connect each rural area with banking sectors. Most of the Indian people who have their accounts with bank, don't know their Rights and obligations. So it is a apprehensive speculation to provide financial education at primary stage in school as a subject. It will develop more awareness in youth and they will be able to use their rights in positive directions.
..first of all let me appreciate the steps taken by RBI in this
matter...each every steps RBI has taken in this matter as to contain
inflation , price rise of essential goods etc are commendable..A point
I have noticed here is a lot of people in the sense each and every one
lives in this world is engaged in money matters in one way or the
other..they are doing this because of their needs of the hour..really
they are not skilled and most of them unaware of how makes such
transactions in a profitable.way...its we can say a kind of an
economic illiteracy...here we need a skill.. we can call it an
economic skill or something like that to spend their money for the
benefit of both them and the country they are residing...
RBI’s initiatives in the field of financial education are to be welcomed. Just as consumers need to be imparted financial education, there is a even greater urgency to train bank officials, as their incorrect interpretation of rules can hurt consumers badly. I have good many experiences of this lack of knowledge of rules on the part of officials of public sector banks. Secondly, there are instances of hapless consumers being robbed of their hard earned savings by unscrupulous company managements which take advantage of poor knowledge of law and procedures on the part of consumers. Here gain the due process of law to punish the guilty is very time consuming.
One basic premise in most of the comments is that common people of this
country are not "financially literate" ,they don't know how to increase
their income, how to spend their hard earned money judiciously, not
aware of working of stock markets, shares, MFs etc., Therefore RBI and
SEBI have to undertake the "burden" of "educating" the common people.
If financial literacy means ability to invest in stock markets, then
people had seen enough of the pearls thrown by the financial wizards
and burnt their fingers; this is solely the reason why retail investors
have virtually shunned the share market. The poor performance of all
most all MFs without exception for the last 3 to 5 years, despite being
handled by the so called "Financial Wizards" is a testimony. Had it
been profitable, people would simply have flocked to the share market
just as ants to puddle of sugar syrup! Let RBI and SEBI concentrate on
the work they are supposed to do. Leave the rest to people to decide.
The basic tool of finance is common sense. We must never allow it to be lost into the mesh of theories.
It is indeed a very great step taken by RBI. Almost all Indians lack basic knowledge about finance especially the middle class and the poor. Financial literacy is an imperative part of our daily life and awareness about savings, investments, stocks and shares, financial services, etc. must be imparted through banks, other institutions (SEBI) to the common people. Financial literacy can have a very significant effect on people living in villages mostly engaged in agriculture as it can enlighten them on how to increase their household income, their savings and how to spend judiciously and most importantly on what to spend. In this respect NABARD can create a revolution in rural India and bring about financial inclusion which is one of the top priorities of 12th plan. As a suggestion financial literacy should be included right from secondary school level as it would help the children get more acquainted with the surrounding economic problems and make them more aware on how to deal with it when they reach a responsible stage. And lastly I would like to thank ‘The Hindu’ for bringing up this fine piece of article.
A good move by RBI and needs to be supported and provided all required
assistance by the Government. Financial literacy becomes need of hour in
era of global financial integration and competition. Young generation
today needs to have knowledge about functioning of economy of a country
so as not to be driven by(or overwhelmed by) excessive spending done by
politicians on popularist measures to decide whom to vote in the
election.
We appreciate the affort of RBI as India is one of growing economies in
the world and its citizens must posses minimal knowledge about finance
and related areas.Financial education can be started at elementary level
for children and for adults print and e-media can be used effectively.By
this,interest can created in young minds and shortage of manpower in
financial sector can be overcome in times to come .It has been rightly
pointed out that piecemeal approach at different levels is not going to
achieve desired goal
As mentioned in the article, there already exists a financial literacy
program conducted by SEBI but it is far less known among the crowd.
The initiative taken by Reserve bank of India is appreciable but it
need to publicized properly so that it does end up into the same way
as the approach by SEBI.
Inclusion of financial education at primary level should be done so
that students can get to know about the know-how of finance. A minimal
knowledge would benefit them as they would get to know the prospects
in this arena.
As an elderly man of over 80 yrs and having retd from Central Govt service, I want to highlight the need for the RBI to instruct all the banks' and also the post offices'saving banks' cashiers all over the country to give the public who draw cash by cheques or withdrawal slips,more time and facilities,note checking machines,etc for checking,specially higher denomination currency notes(of Rs.500 and Rs.1000/-) at their counters. I find this necessary as many who draw cash or shopkeepers who deposit from/into the bank counters/post offices' savings counters have become the victims of fake notes. Even the Daily News Papers have recently reported large increase of such fake notes in higher denominations in recent days.This matter of educating/giving public checking facilities is urgent as many of the public who get the fake notes try to change them in shops late in the evenings of the day?!
This is a laudable initiative of the Reserve Bank. Indian Banks Association and Indian Institute of Banking & Finance could be roped in to produce graded books in various languages available online and print form for citizens on the topics indicated by RBI in its draft strategy. One may be a scientist or an Engineer and still not know the basics of finance. World of finance is getting complicated everyday and the need of the hour is to produce and make available books on the subject for the understanding of students, housewives and non-finance persons.
I personally feel that financial education must be included in the
curriculum right from childhood (at least as a recreational subject
like art & craft). We don't have even a minimal knowledge about
stocks, investments, Sensex et cetera till now and these topics were
rarely discussed even at home. I realized there is a lot to be learnt
in this field. Perhaps the book 'Rich dad - Poor Dad' could help in
opening the horizons of one's thinking in this field. Good work by
Hindu in bringing this to limelight.
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