Regulators seek to create financially aware and empowered India
The draft “National Strategy for Financial Education” seeks to create a “financially aware and empowered India” and convert savers into investors over five years
Mumbai: Financial sector regulators, including Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and the Insurance Regulatory And Development Authority (IRDA), on Monday proposed a nationwide survey for assessing financial inclusion and literacy in the country and educate 50 crore adults, besides providing financial education to school children, reports PTI.
The draft “National Strategy for Financial Education” seeks to create a “financially aware and empowered India” and convert savers into investors.
It pitches for a five-year action plan for financial literacy with initial focus on four sectors—banking, securities market, insurance and retirement planning.
The strategy, the draft said, is to undertake a massive financial education campaign to help people manage money more effectively to achieve financial well being by accessing appropriate financial products and services.
“In India, we need to convert savers into investors,” the draft, pared under the aegis of the sub-committee of the Financial Stability and Development Council (FSDC) and simultaneously released for comments by all financial sector regulators, said.
On more participation of domestic retail investors in the securities market, the draft said it will reduce dependence on foreign investors and domestic savers reaping benefits of corporate growth and reducing strain on government for investment in national infrastructure.
Acknowledging that increasing range and complexity of products has made it very difficult for an ordinary person to take an informed decision, the draft said financial literacy will help in protecting society and individuals against exploitative financial schemes and exorbitant interest rate charged by moneylenders.
Financial education will help to avoid over-indebtedness, improve quality of services and make wise financial decisions, the draft said.
On delivery channels for financial education, the draft policy said governments have recognised that it should start at school and that people should be educated about financial matters as early as possible in their lives.
“Our educational system should equip students with these necessary life skills, without which, education will be incomplete,” it said, adding the Central Board of Secondary Education (CBSE) has agreed, in principle, to introduce it in an integral manner in school education.
It said social marketing campaigns such as polio eradication, prevention of child marriage and female foeticide, can serve as models in financial education.
Pitching for using services of self-help groups and NGOs, the draft said mass media like TV, radio, print and internet should be exploited fully for financial education.
It further said there is a need of multi-lingual, toll-free helpline where an investor, customer and client can call and get friendly assistance.
“It (helpline) should be like a friend who is available to guide you in case of difficulties. All regulators can think of such initiative, if they have not already thought of it,” the draft proposed.
The document said the entire policy is sought to be implemented through existing institutional mechanism.
National Institute of Financial Education (NIFE) could be a specialised institute under National Institute of Securities Markets (NISM) reporting to the technical group for implementation of National Strategy for Financial Education.
The draft said as a very first step towards financial literacy, a nationwide sample survey through an outside agency like NCAER, should be carried out for assessing the state of financial inclusion and financial literacy.
The survey should cover the state of financial inclusion, awareness of financial products, financial competency and his/her attitude towards money and risk.
Click here to see the draft (http://www.sebi.gov.in/cms/sebi_data/attachdocs/1342416428845.pdf)
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