How to make India a financially literate country- strategies

Financial literacy is the ability to understand how money works, how someone
manages to earn and how anyone invests it to make it more .In common parlance
financial literacy is the possession of knowledge and understanding of financial
matters. It is mainly used in in connection with personal financial matters. Financial
literacy often entails the knowledge of properly making decisions pertaining to
certain personal finance areas like real estate, insurance, investment, saving tax
planning and retirement it also involves intimate knowledge of financial concepts
like compound and simple interest, financial planning, advantageous saving
methods, consumer rights, time value of money etc. The absence of financial literacy
can lead to making poor financial decisions that can have adverse effects on the
financial health of the individual as well as on the country.

The Presidents advisory council on financial literacy defines personal financial

literacy as The ability to use knowledge and skills to manage financial resources
effectively for a lifetime of financial wellbeing.

Basically speaking India being a country of villages it has a lot of challenges

for making all the citizens financially literate. Most of the villages are agro based
which can be called subsistence agriculture. Farmers anyhow managed to run their
families with their meagre income hence they are unable to educate their children
.education is the backbone of financial literacy. If proper education is provided then
financial literacy can be strengthen in our country. Most of the students are dropout
due to lack of money and other social constraints like poverty .
Most of the people of India i.e. folks dont have proper documents for opening a
basic no frills account and hence they are out of reach of banking services and bank
which now a days can be called mother of all financial needs. Here chit funds plays
a vital role for deceiving the public. Chit funds generally provides high commission

for agents and which attract unemployed youths for working for them as agents and
collects money from the poor classes to deposit in these Chit funds. Poor people
generally finds it easy for accumulating saving as it does not require KYC (know
Your Customer) formality. NBFCs like Sahara, Rose Valley also plays the same
role .Poor villager thinks these financial institutions are better than the Nationalized
banks or insurance companies as they provide door to door facility for collecting
money through their respective agents. Being a government organization,
nationalized banks or other
government financial institutions strictly follows
KYC norms which create a problem for the people who dont have proper documents
supporting their identity and address.
Financial inclusion has touched many untouched areas but many more have to be
covered. Providing a no frills account to a customer is not cost effective for the banks
for short time , it may be, prove fruitful in the long run.
It is observed that people come to open an account with KYC documents ,but
their name and address differ in the documents they brought which create doubt in
the minds of bankers ,which ultimately hampers them to be a part in Indian financial
system and retards financial literacy among the masses. It is to be mentioned here
that respective documents issuing department do not take care for documents they
issue.
There is a saying goes in village areas that if money can be saved, it can be saved
at home, not at financial institutions like banks and post offices. They are unaware
about the interest rate they will get at financial institutions and other facilities. Even
in urban areas some places of Assam State Bank Of india is the only Bank .They
dont have any idea about the other nationalized Banks .Even some portion have a
fear of bankers or financial institutions.
Another challenge .i.e. many educated people dont know how to fill up the
forms to avail financial facilities. They know how to do but they dont have
confidence. Lack of confidence is the challenge of Indians to be a part of financial
system.
Many people goes to bank only for depositing or withdrawal of money. They are
only known to the saving bank account but unaware of the profitable other deposits
like Recurring and Fixed Deposits Mutual Funds etc.

Another challenge is that villagers dont want to save money for their future for
which capital accumulation is low. Urbanisation of backward areas with basic
facilities can increase financial literacy among them.
Most importantly the unfriendly and unempathetic attitude of banks and bankers
towards customers also helps in reducing financial literacy among the people.
Language is another barrier. Due to lack of man power interstate transfers are done
which creates barrier between the people as the local people generally do not
understand the language of the other state.

Improvement of financial literacy is a long term behavioral change initiative. It

requires a multi-faceted approach and sustained action over time to bring about
gradual improvement. The strategies for making India a financially literate country
are as follows..

1. Educating the present and next generation through formal education system:
Present young generation equipping with the basic knowledge, skills and behaviors
needed to make good financial decisions, will give them an essential skillset to use
and build on throughout their lives. For their equipment with financial knowledge
following can be done
financial literacy should be a curriculum in schools. From class five onwards
financial terms should be introduced. From eight standard there should be a separate
subject for financial education. If children get good knowledge regarding finance
and financial institutions this will be fruitful for their future as well as for the
country. More financially literate people means a healthy economy and a sound
individual.
Having a bank account should be made mandatory for eight and above standard
students so that by the time they become mature they should know all about finance.
Teachers, the very necessary thing in the society needs to be well trained in
financial education. A well trained teacher can impart good knowledge of it.

Sometime bankers should be called to schools for giving a lecture on financial

literacy. Practical training can be given to students by taking them to banks .

Development of resources for teachers and students such as materials related

to financial literacy in printed form or online should be made available with the
financial institutions free of costs. Increasing engagement of teachers and delivering
free workshops to school students as well as to the mass of the surrounding areas
help them to learn about money and creating opportunities for teachers , students
and local people to share their resources and provisions should be made for award
for the teachers who made people and students financially aware.
2. Increase the use of resources i.e. materials of financial literacy free of cost:
resources should be made available with mobile platforms and printed with the
financial institutions such as Pamphlets, Magazines etc this will help them to
publicize themselves with the society as well as increase financial literacy among
the people. Pamphlets and magazines , if ,in local language then more helpful for the
people.
Retired financial institutions officers can help better here as they are more
experienced and they are socially established so their words have more value than
anything printed.
3. Quality targeted guidance and support especially to vulnerable groups: delivery
of national savings products, microfinance programs to the targeted people i.e. to the
rural and remote areas can accelerate financial literacy to a great extant .financial
institutions always open their branches in populated areas for their profit concern
therefore village areas always remain out of touch .Therefore , for their inclusion in
the economy village Panchayats should be made responsible for making rural people
financially literate. All ward commissioners should be ordered to make at least 10
people financially literate in one month .
Guidance to the people living in remote places and making them understand
about profit of financial products such as small savings ,micro insurance products
can help India becoming a financial literate country.
NGOs and other social organization should be used as intermediaries for
vulnerable groups to literate them for financial products. Feedback to be taken from
these organization for further development of the communities.

4. Cartoon based stories: cartoons are very popular among teenage groups in the
society .Therefore cartoon based story from each of the nationalized banks in
regional languages describing benefits of different financial products (in a year one
volume) can accelerate financial literacy among them. RBI can encourage
nationalized banks by giving Best Cartoon Story award to them.
5. Advertisement of different financial products basically by nationalized banks in
the local news paper giving a detail of the product and village heads as brand
ambassador can accelerate literacy to a great extent .Village heads have great
influence on the people of his area and most villager follows village heads saying.
6 Use of mobile Van: mobile financial literacy vans in the north eastern states can
increase financial literacy among the hill areas as hill areas are lacking in financial
institutions.
6. Co-ordinataion: arrangements should be made for proper coordination and
supervising with RBI and nationalized banks with different participating
organization and NGOs for better result. Toll free helpline number should be
introduced by RBI or nationalized banks for increasing financial literacy in India.

While a number of measures have and are being taken across the country, given
the enormity of task, a lot of ground still needs to be covered. Apart from the
government and the regulatory bodies ,there is a need for involving the civil society
and all other stakeholders in spreading financial literacy. We need to evolve distinct
strategies targeting the school children and the adult population. We are still
evolving a formalized curriculum for schools, which teaches them the basic
principles of money, credit, savings and investment and introduces them to the way
our financial system operates. After all, while one time, targeted programmes are
useful, including financial education into schools in an ongoing manner would hold
the key to making our future generations financially literate.

All the above mentioned can be achieved with basically governments initiative
along with nationalized banks and NGOs participation with a view to make in India
a financially strongest country of the world. More importantly, it is to be mentioned

here that, government will just take initiative but whole work have to be done by
nationalized banks because banking services are cheaper than any other financial
services. PMJDY (Prime Ministers Jan Dhan Yojana) has popularized banking
services among the people. Being a banker, I have noticed that the people who never
before been to banks now getting a passbook enquire a lot about other services or
products and how that product are beneficial to them.
Financial inclusion is a good opportunity for the poor, for the financial
institutions and the nation because of growing incomes, awareness and
consciousness level and rising aspirations of the poor. If financial institutions
basically nationalized banks take this opportunity as exciting and move fast towards
financial inclusion, financial literacy of India will rise to a great extent.