Authorities need to outsource by adequately funding financial education and financial literacy process to genuine non-partisan entities with established track record

There is an urgent need to bring about financial education into secondary schools advancing upto college levels by enlightening the lay aam janata who are confused with the finance mumbo-jumbo brandished by experts.
 

Financial education on various types of bank accounts has to begin at the standards VII to XII by adopting a ‘Financial Fitness Camp’ approach or as project work forming part of extra-curricular activities.
 

The only way to impart financial education to them at an early age the school level is to pass through their own bank accounts all pocket money incomes and spends. This can act as the baby steps at inculcating the ABCs or basics of rewards of savings and time value of money by taking the form of opening and operating minors’ savings bank accounts for school kids. Into this stand-alone account, parents and kids can deposit their pocket money savings. It can go a long way in the children acquainting themselves with basic banking transactions of deposits of money, withdrawals, payments, the interest earned. They will also monitor their balance from time to time to enable them to take better spending and saving decisions and possibly help bring about a change for the better, with greater financial education for kids from all streams, not necessarily only commerce or economics.
 

The parents should also be encouraged to deposit school fees and all related expenses like uniforms and books that can be paid out by the parent issuing cheques from the kids’ account. The college years can impart practical studies or internships to understand basic concepts of finance beginning with better money management such as evaluation of risks and rewards of investing, returns thereon, effects of leverage and taxes, financial planning, asset allocation, various insurance and mutual fund products.
 

The college years can impart practical studies or internships to understand basic concepts of finance, with better money management such as evaluation of risks and rewards of investing, returns thereon, effects of leverage and taxes, financial planning, asset allocation, various insurance and mutual fund products.
 

In order to boost banking confidence levels in the children, instead of parent/ guardian alone signing the cheques, the RBI should permit children to sign along with parent/ guardian countersigning as is the procedure adopted for dual signature accounts. An upper limit of Rs2,500 at a time could be imposed.
 

HDFC Bank seeks to target the “parent/ guardian” segment through potential investment rather than pure deposit account positioning, because the current RBI norms do not permit persons below 18 years to operate accounts and only the parent/ guardian is entitled to sign cheques or withdrawal slips.  It aims at appealing to parents to visualise bank accounts as alternate and diverse avenues for investing for the child’s future by helping them maximise savings and returns. Children between the ages of 7-18 years are provided with free personalised cheque books and ATM debit cards with limits of Rs2,500 for purchases and cash withdrawals. Additionally, Free Education Insurance cover of Rs1 lakh in the event of death of the parent/guardian, free standing instructions to transfer upto Rs1,000 to their Kid’s Advantage Accounts, automatic sweep-out when savings balances exceed Rs25,000 and systemic investments in mutual funds, are provided.

Unlike the West, where their teenagers are financially on their own very fast, Indian children are overly sheltered by doting parents. They do not seem to realise the hardships and travails the parents undergo to bring them up. Instead of learning how to fund their education, Indian children expect their parents not only to fund their college education (both undergraduate and post-graduate) but also their marriages and homes too! Not to mention the demands for designer clothes, watches, gizmos like i-pads and high-end mobiles, bikes and foreign travel even while in school and college. They are known to dip into parents retirement funds and don’t hesitate to dump them into retirement homes.
 

Ideally, parental hand-holding support to our kids should not extend beyond providing their offsprings basic graduation qualification and insist that all spends thereafter should necessarily be self-financed, including post-graduate studies as well as marriage expenses. Nothing whatsoever, from the parental retirement kitty that ultimately goes to them after both the parents are no more and never before when alive.
 

For the girl child the RBI can better direct the banks to put across to the average Indian women homemakers and their daughters the need to save and not hanker after acquisition of more and more gold.
 

Banks rarely advise the immense benefits of opening an ‘Either/Number One’ or ‘Survivor’ instead of a single name and the need for both the parents and not only one as guardians for minor children. Similarly, the need for nominations is not adequately emphasised as being an inbuilt ease for transmission, even without a Will in the event of the passing away of the account holder. The process of opening of bank accounts begins with mandatory KYC (know your customer) compliance that essentially means providing proof of residence and identity. Instead, it is demanded so crudely that it appears to be more an exercise in the nature of “Kick Your Customer”.
 

Our financial regulators—SEBI, RBI, IRDA, and Ministry for Corporate Affairs and stock exchanges—are known to sitting pretty on sizable kitty statutorily and specifically earmarked for spends on Investor Education and Protection. SEBI mandates that fund houses apply 0.02% of their assets on investor education. The NSE has an ongoing programme aimed at teaching 2,000 Tamil Nadu schools. kids the basics of money management. BSE has been sponsoring a TV Reality show Sensex ka Sultan, Birla Sun Life MF has a skit on why MFs take time to deliver. On the face of it both appear inane as they don’t get across to effectively communicate the right information fast enough to educate even an average middle class saver/ investor, let alone any aam sheheri insaan,  penetrating the interiors. Nothing like an Amul Ad that passes a crisp sandesh at a glance across the board.
 

Authorities need to outsource by adequately funding the education process to genuine non-partisan entities with established track like the Moneylife Foundation to conduct programmes/ workshops/ talks on the merits and demerits of products and schemes, their costs and returns, the hidden catches, the rights and remedies for defaults without promoting any entity or product in particular.
 

Promoting financial education and financial literacy can help greater good in the society by providing the middle classes (not that our ultra-high networth are great investors – they are known to lose a lot more money and yet they are none the wiser. This is the subject of another of my write-ups) with a better understanding of finance, banking, investments, insurance and to guard against unscrupulous promoters on the look out for financial scams.
 

 (Nagesh Kini is a Mumbai-based chartered accountant turned activist.)