Although financial literacy is one of the topics least discussed, the need to know more about now is more important than ever. Being one of the largest developing nations in the world, India’s need to know about financial literacy should be one of its main concerns. This is especially critical where the majority of the population have no clue what financial literacy even means.
According to the world web, financial literacy is defined as the capability to use proficiency and information to take effectual and informed money-management assessments.
Encouragement of monetary inclusion
For an emergent country like India, this is especially significant as it increases the encouragement of monetary inclusion, therefore, resulting in economic stability.
In the entirety of South-East Asia, less than twenty-five percent of the population is financially literate. India is host to 17.5 percent of the world’s population, but the sad reality is that more than seventy-six percent of the population does not understand what an advantage financial literacy would be. These statistics are according to a global survey performed by Standard & Poor’s Financial Services LLC.
In fact, according to the survey, India has been consistently down in regards to financial literacy while compared to the rest of the world, with of course, one of the major myths being all the rich people are automatically assumed to be financially literate.
It is common sense that lack of financial literacy ultimately leads to poor investment options.
Four major financial regulators
To combat this problem, four major financial regulators; the RBI (Reserve Bank of India), Sebi (Securities and Exchange Board of India), IRDAI (Insurance Regulatory and Development Authority of India) and PFRDA (Pension Fund Regulatory and Development Authority); have constructed a dual agreement: National Stratergy for Financial Education. This contract involves initiatives taken up these regulatory bodies along with other financial institutions such as banks, insurers and mutual funds to increase the financial knowledge of the average Indian citizen. And of course, individual efforts under one umbrella results in better outcomes.
Of course, with the digitalization of the modern world, technology has become an integral part of our lives. Efforts include, interactive quizzes, videos and short films will definitely have a wider reach as compared to the traditional medium.
With Digital India, another government initiative, digital fluency is well expected to rise above and beyond.
Cashless payments are on the rise
Due to demonetization, more people will be included in the organized sector with the disappearance of black money, therefore opening up the possibilities for financial literacy.
Thanks to digital banking and wallets, cashless payments are on the rise as well as the use of smartphones. India, with 220 million smart phone users, is one the biggest smart phone markets in the world.
Two main aspects to an efficient economic stability are financial literacy and financial stability. The former augments the citizen’s capability in ensuring the economic and financial stability of their families.
The millennial generation is much more economically active compared to the previous generation and since millennials are leading the way, this is a step in the right direction.