Financial Freedom is available to those who learn about it and work for it
- Robert Kiyosaki
In the recent wake of demonetization, the RBI and Ministry of Finance have shifted their focus towards spreading awareness about digital payments. Definitely, this initiative will ensure smooth flow of financial transactions even with a small scale business enterprise. As a natural side effect, people misinterpret digital know how alone to mean financial literacy.
In a survey conducted by the Standard & Poor’s Financial Services LLC which is renowned to be the most comprehensive survey, it was found that 76 % of the Indian adult population were financially ‘illiterate’. The survey used Inflation, Numeracy, Interest Compounding and Risk Diversification as four standards for measurement. It considered one as a literate if he could answer at least 3 questions out of 4 correctly. One out of every four persons being financially literate is not a comfortable ratio to go about.
In this era of globalization, where the world is looking at India as a worthy global competitor, earning alone is not enough. It is equally important to know how to manage these funds. When one is financially literate, he will tend to be more inclined towards saving his funds using the right financial tools. And when such tools are used in the right manner, it will result in higher returns. After all, a sword is only of use if it is in the hands of one who can wield it.
The Government and RBI should play a key role in promoting the same. In a recent letter issued by the RBI to all the Scheduled and Commercial Banks it read “To emphasize the importance of financial literacy, it has been decided to observe the week June 5-9, 2017 as Financial Literacy Week across the country.” The literacy week focused on four broad themes, viz. KYC, Exercising Credit Discipline, Grievance Redressal and Going Digital. The initiative, although with the right intentions, did not reach out to address the more serious issue hampering the country’s development.
It’s high time that the government and the RBI realize, financial literacy is not just about E-Banking, but about educated and informed banking.
Author
Nitish Reddy
Nitish Reddy is an article associate at KVA LLP. He is tech savvy and is regularly updated with the latest happenings in the tech world. Being inquisitive in nature, he seldom lets any opportunity pass which comes his way. Nitish is also a domain investor with almost two years of experience in the industry.
