Being in the social sector, one becomes aware of the disadvantages poor face for accessing financial services. Many a times they are not even aware of the various benefit schemes introduced by Govt. A major reason for this existing scenario is information gap. In these terms, financial literacy assumes paramount importance.
Financial literacy is a prerequisite for effective financial inclusion, which will ensure that financial services reach the un(der) banked sections of the society, leading to consumer protection through self-regulation. By making people aware of the exsiting products and services and the ways and means to utilise them to their advantage, financial literacy helps in stimulating the demand side of financial markets.
In recent years, as the financial markets have become increasingly complex with the risk shifting from governments/corporations to individuals, managing risks require individuals to be able to access information that enabled comparison of the various available choices. Both developed and developing countries, therefore, are focusing on programmes for financial literacy/education. In India, the need for financial literacy is even greater considering the low levels of literacy and financial capabilities, and the large section of the financially excluded population.
For this purpose, Govts and financial institutions across the world are involved in developing and implementing programs on these lines. Recently, the Reserve Bank of Fiji launched the Green Ribbon Campaign as a partnership between the public and private sectors and non- government agencies to promote financial literacy. OECD has been quite active in this direction having implemented its Project on Financial Education, and established the International Network on Financial Education and the International Gateway for Financial Education (the first international clearinghouse on financial education).
In India, Reserve Bank of India (RBI), with the assistance of Organization of Economic Development (OECD) has issued a concept paper, promoted a financial literacy website, and set up credit counseling centers to provide advice on personal finance. RBI’s ‘Project Financial Literacy’ aims at disseminating information about the central bank and basic banking concepts through various media like films, games, cartoons and comic books, and essay writing competitions, specifically target school and college-going students. Various corporate banking organizations have also promoted financial literacy drive, mostly as part of their Corporate Social Responsibility.
However, there is still a lot to be done. India is a diverse country with different regional profiles in terms of language and culture, accessibility and reach. There is a wide divergence in literacy levels across and within the States. Penetration levels of the formal financial sector, especially between rural and urban areas are quite wide. This diversity makes a standard pan-India program redundant.
The need of the hour is to design and implement programs specific to the target audience and involving use of suitable media; bring out publications in vernacular and simple language and ensure distribution of the material to the people in both urban and rural areas. Also appoint instuctors/counsellors from local areas who have the requiste qualifications as well as the trust of the people. One possible solution is the training of Business Correspondents to pass on the financial information to the customers. At the same time, monitoring and evaluation systems need to be build up so that the programs effectively reach the intended.
Showing posts with label Financial Literacy. Show all posts
Showing posts with label Financial Literacy. Show all posts
Sunday, August 22, 2010
Wednesday, June 23, 2010
Women Empowerment: Factors Beyond Finance!
Hi! I am Swati and this is my first post in the blog.
I am really excited to share a perspective of women empowerment, what makes a difference? Is it mere higher income in numbers or financial and social prudence or what practitioners allude to as financial education packed with social esteem? In our bharat desh there are various financial schemes for upliftment of garibs whether by Government or market led solutions like MFI credit. Development agencies have targeted women as client for their vikas aur pragati yojanas (development schemes). Many a times the idea echoes vociferously---“Financial independence (as in earnings) is the symbol of women emancipation”. However, on my recent trip to the districts of S24Pgs - South 24 Parghanas in West Bengal and Ramanagara & Kolar in Karnataka, I met with a different kind of experience. As inquisitive interns my friend, Mandy & I met a number of women who were “self-employed” and were involved in local sales of different FMCG products. One particular woman is etched in my mind – Bharati - a 58 yrs old “self employed” housewife. Amongst all the women we had met, her sales figures were booming which stood testimony of her flourishing business, and translating into higher monthly income than her peers. However, when we met her, she was so shy that she couldn’t even speak for herself and for the entire period of interaction, remained behind her sari ka pallu. On the contrary, Sakamma who didn’t show up much high on the income scales, but was brimming with confidence and self-esteem. She was clear about her priorities in life ---- a dream to provide a better life to her kids through education. And in spite of earning less; she put aside some savings every month to fund her kids’ school expenses.
The observations were startling and quite against popular belief that higher income means empowerment of women in household. While financial independence is most definitely a necessary condition and can be seen as the first step towards economic-empowerment, it is not a sufficient condition and thus should not be seen as the only criteria for judging whether a woman is empowered or not; a generalization which is made by many. And thus it necessitates to look into other parameters, may be social and psychological ones to fully understand the immediate effects and long term impacts made by a yojanas (schemes) on the lives of the women and their families. At the same time, real empowerment entails information and independence to contribute in decision making process like Sakamma had. In this context, in addition to yojanas and finance, initiatives like financial literacy and life skills gain currency and prominence to help poor women folk to help themselves Save and deposit a portion of their incomes, invest wisely and strive for better standards of living. This would ultimately aid women at the bottom of the pyramid to come out of the cycle of financial exclusion.
I am really excited to share a perspective of women empowerment, what makes a difference? Is it mere higher income in numbers or financial and social prudence or what practitioners allude to as financial education packed with social esteem? In our bharat desh there are various financial schemes for upliftment of garibs whether by Government or market led solutions like MFI credit. Development agencies have targeted women as client for their vikas aur pragati yojanas (development schemes). Many a times the idea echoes vociferously---“Financial independence (as in earnings) is the symbol of women emancipation”. However, on my recent trip to the districts of S24Pgs - South 24 Parghanas in West Bengal and Ramanagara & Kolar in Karnataka, I met with a different kind of experience. As inquisitive interns my friend, Mandy & I met a number of women who were “self-employed” and were involved in local sales of different FMCG products. One particular woman is etched in my mind – Bharati - a 58 yrs old “self employed” housewife. Amongst all the women we had met, her sales figures were booming which stood testimony of her flourishing business, and translating into higher monthly income than her peers. However, when we met her, she was so shy that she couldn’t even speak for herself and for the entire period of interaction, remained behind her sari ka pallu. On the contrary, Sakamma who didn’t show up much high on the income scales, but was brimming with confidence and self-esteem. She was clear about her priorities in life ---- a dream to provide a better life to her kids through education. And in spite of earning less; she put aside some savings every month to fund her kids’ school expenses.
The observations were startling and quite against popular belief that higher income means empowerment of women in household. While financial independence is most definitely a necessary condition and can be seen as the first step towards economic-empowerment, it is not a sufficient condition and thus should not be seen as the only criteria for judging whether a woman is empowered or not; a generalization which is made by many. And thus it necessitates to look into other parameters, may be social and psychological ones to fully understand the immediate effects and long term impacts made by a yojanas (schemes) on the lives of the women and their families. At the same time, real empowerment entails information and independence to contribute in decision making process like Sakamma had. In this context, in addition to yojanas and finance, initiatives like financial literacy and life skills gain currency and prominence to help poor women folk to help themselves Save and deposit a portion of their incomes, invest wisely and strive for better standards of living. This would ultimately aid women at the bottom of the pyramid to come out of the cycle of financial exclusion.
Saturday, May 22, 2010
Financial Literacy: Evangelists and Skeptics!
“What is the need for Financial Literacy”, will it really help? Do you think poor don't know simple funda of saving money?. “This is a simple logic” told me my knowledgeable and “logical” microfinance-consultant friend during coffee break at a recent conference in the Indian city of Hyderabad last month. I did encounter similar echoing in an other conference from head of a leading microfinance research organization few months back when He said, “Even I don’t know, if I am financially literate” How could you be sure if masses in rural areas would really be financially literate because of any financial literacy programme? The two point of views are a dominant logic prevalent among a substantially large section of the elite group which is at the helm of affairs for driving the agenda of financial inclusion in India.
Yes, poor do understand the importance of savings and they deposit for lean times and that is the reason why poor keep their monies as a deposit with money keepers in rural and informal urban areas in countries like Bangladesh and India (Collins,Morduch, et.al Portfolios of the Poor, 2009). They are wise enough to invest the informal savings instruments like chit funds (in rural Andhra Pradesh state of India).
However, what makes the difference is the institutional framework of micro banking which entails other developmental ripple effects. what masses at bottom of the pyramid lack today is not understanding of the importance of financial transactions but the awareness about availability of micro banking instruments and access to these instruments . It is here where the basic financial literacy can be of use by exposing the masses to this very dimension of financial inclusion. How far the efforts of financial literacy evangelists will go in India will be determined largely by the ability of these evangelists to share success stories and changemaking narrations with my skeptical friends across the table.
Yes, poor do understand the importance of savings and they deposit for lean times and that is the reason why poor keep their monies as a deposit with money keepers in rural and informal urban areas in countries like Bangladesh and India (Collins,Morduch, et.al Portfolios of the Poor, 2009). They are wise enough to invest the informal savings instruments like chit funds (in rural Andhra Pradesh state of India).
However, what makes the difference is the institutional framework of micro banking which entails other developmental ripple effects. what masses at bottom of the pyramid lack today is not understanding of the importance of financial transactions but the awareness about availability of micro banking instruments and access to these instruments . It is here where the basic financial literacy can be of use by exposing the masses to this very dimension of financial inclusion. How far the efforts of financial literacy evangelists will go in India will be determined largely by the ability of these evangelists to share success stories and changemaking narrations with my skeptical friends across the table.
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