National Strategy for Financial Education

Context

Reserve Bank of India has introduced 5-year national strategy for financial education.

Background

The Reserve Bank of India released a national strategy for financial education to be implemented in the next five years, the central bank added that the approach is aimed to create a financially aware and empowered Indian society.

The document NSFE (2020-2025) is prepared by the National Centre for Financial Education (NCFE). It was prepared in consultation with the four financial sector regulators and other relevant stakeholders.

The Reserve Bank of India (RBI) came out with a ‘5-Core Actions’ approach for promoting the financial education, which among other things include development of relevant content for school children and adults, community participation and collaboration among various stakeholders. The ‘National Strategy for Financial Education 2020-2025′ (NSFE), released by the RBI, has suggested a multi-stakeholder led approach for creating a financially aware and empowered India. The five Cs, outlined by the strategy paper, are Content, Capacity, Community, Communication and Collaboration.

It also makes a case for integrating financial education in courses like B.Ed./M.Ed. besides other teacher's training courses to create a cadre of financially educatd teaching professionals. It calls for development of a financial literacy mobile app, and leverage social media.

The Technical Group on Financial Inclusion and Financial Literacy (TGFIFL) would be responsible for periodic monitoring and implementation of National Strategy for Financial Education. There would also be periodic monitoring of the activities undertaken by various stakeholders for dissemination of basic, sector-specific, and process literacy.

Objective of the Scheme

To inculcate financial literacy concepts among the various sections of the society through financial education and encourage active savings behaviour. Among the other strategic objectives to encourag participation in financial markets to meet financial goals and objectives, developing credit discipline and encourage availing credit from formal financial institutions as per requirement, and improving usage of digital financial services in a safe and secure manner.

Its key objectives includes to educate on managing risk at various life stages through relevant and suitable insurance cover and plan for old age and retirement through coverage of suitable pension products.

The document stresses on development of financial literacy content for school children (including curriculum and co-scholastic), teachers, young adults, women, new entrants at workplace/entrepreneurs (MSMEs), senior citizens, persons with disabilities, illiterate people.

Conclusion

Strengthening financial inclusion in the country has been one of the important developmental agendas of both the Government of India and the four financial sector regulators (RBI, SEBI, IRDAI and PFRDA). Financial literacy supports the pursuit of financial inclusion by empowering the customers to make informed choices leading to their financial well-being.

Connecting the Article

Question for Prelims

With reference to the National Centre for Financial Education, consider the following statements:

1. It is is the premier financial policy ‘Think Tank’ of the Government of India.
2. It aims to promote financial education across India for all sections of the society.

Which of the statements given above is/ are correct ?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question for Mains

Discuss the challenges for financial literacy in India.