FINANCIAL LITERACY, FINANCIAL EDUCATION AND STRATEGY

Abstract

This article is a policy paper on the Strategy for Financial Literacy in India. Literacy is known to be different from education. While literacy seeks to equip you with facts, data and information, education calls for internalizing or putting into practice these facts, data and information. In India, the National Centre for Financial Literacy (NCFL) is a body which has taken the onus of measuring the level of financial literacy among school students. This institution seems to have done little towards the spread of financial literacy. Simply conducting financial literacy tests and measuring the level of financial literacy will lead us nowhere unless the appropriate infrastructure to disseminate financial knowledge is in place and its existence is made known to all. This literature proposes creation of a central repository of financial literacy material by the technical Sub-Committee of Financial Stability and Development Council (FSDC)1 on Financial Inclusion and Financial Literacy.  The committee shall work towards its Vision of a Financially Aware and Empowered India by creating awareness about the need for financial literacy, establishing  information distribution infrastructure,  effectively launching a 24x7 financial hotline facility and implementing the said using tailor made information dissemination strategies. The literacy material of the sub-committee to focus on the primary pillars of financial education – compound interest, volatility management and consumption-saving trade-off while explaining various financial concepts. The FSDC has adequate representation in paper from the major financial markets and their respective regulators' head. In addition to the above, the article proposes to enlarge its vision by inclusion of representation from financial academicians.  We also speak about introduction of financial literacy curriculum at the secondary and senior secondary level with intervention of the MHRD. Spread of financial literacy is a precursor to financial education which once achieved will lead India into the league of financially sophisticated economies relying heavily on paperless money, the benefits of which are known to all. The article is presented in three sub-parts – I: Introductory thoughts, II:  National Strategy for Financial Literacy and Education - Vision, Mission, Goals, Strategic Action Plan and III: Action required to be taken and by whom.