A STUDY OF FINANCIAL LITERACY OF WORKING WOMEN OF RAIPUR CITY

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1 A STUDY OF FINANCIAL LITERACY OF WORKING WOMEN OF RAIPUR CITY Mrs. Bani Saha Department of Education, St.Vincent Pallotti College Abstract India has already begun the movement of women education and women empowerment. In this race of being empowered, one of the major contributing factor is being economically strong with sound decision making capacity in financial matters. This can be achieved when they become financially literate. The study found working women have better knowledge of fixed deposit, saving account and recurring account, whereas they are poorly acquainted with risky investments like shares, mutual fund etc. Credit products like vehicle loan and housing loan are well known by them. Though they know about the importance of health yet very few hold the health insurance. This research paper concluded with an emphasis upon the financial literacy among working women. This will make them better manager of their money and thus, better empowered. Keywords Financial literacy, Investment products, Insurance products, Financial knowledge. I. INTRODUCTION Education is a life long process and enables people to skills and techniques useful for day- to-day life. In fact, education is a tool to empower people socially, economically,politically and culturally. We need education because it provides the required knowledge and skill to lead a meaningful life. Keeping this fact in view, various educational policies & systems have been implemented by the Government of India and also special schemes for women education. As a result, literacy rate of both men & women are rising year-by-year. Another important fact is that though the literacy rate has improved, there is a remarkable lack of financial literacy- specially among women (both literate and illiterate). Researches have reported insufficient financial literacy which leads to inability of individual to invest wisely or secure their financial well being. Financial literacy aims at people gaining a practical understanding of financial matters and act accordingly for their financial well-being. In simple terms financial literacy can be defined as the knowledge of raising funds and using it in a profitable way including savings, reinvestments of profits, being aware of risks in business, etc. According to former Finance minister, Mr. P. Chitambaram, Financial literacy needs to be embedded in our way of life. Everyone who earns an income is a potential saver, every saver is a potential investor and every investor ought to be financially literate Rationale Of the Study In India women particularly are active in decision making of household resources and also they have a natural tendency to save and invest but unfortunately not through appropriate ways.women generally accumulate some money at home. This accumulated money is generally through big denominations note i.e. rs 500 & Rs This fact became very much visible after the end of the validity of tender of Indian currency in denomination of Rs 500 and Rs 1000 on 8 nov Though this habit of accumulating money at home is more among non-working women,it also prevails among working women.if this money would have been properly invested, it would have been grown and given them benefit and would have contributed to National benefit. Therefore for transformation of savings All Rights Reserved 154

2 investments through appropriate instruments, they need to be financially literate. With this belief, the current study attempts to study the extent of financial literacy among working women of Raipur city, C.G. II. OBJECTIVES OF THE STUDY 1.To identify the level of basic knowledge of investment products among the sample respondents. 2. To understand the extent of credit facility product knowledge among the sample respondents. 3.To identify the basic knowledge of insurance products among the sample respondents. III. METHODOLOGY 3.1. Sampling Design The study was carried out in Raipur city during A sample of 105 working women are chosen for the study.out of which 5 are rejected. Therefore, my sample size is 100. Only working women were considered assuming that a person is more concerned about money when it is her own earning. For the present study, random sampling method was chosen on convenience Raipur Profile Raipur is a fast growing, industrial and business city of C.G. It is growing in every respect-agriculture, industries, education, shopping malls and business centers, growing opportunities of tourism, etc. which opens a large scope /area for people (including women) for work and financial growth. It is on its way to become a smart city. IV. TOOLS OF DATA COLLECTION The study is based on survey method and involves collection of primary data from working women.to collect data for this study interviews of the working women are taken directly as well as through cell phones. The secondary data was collected from various books and articles published in various magazines and journals. Working women from different socio-economic levels were selected. The primary data was collected with the help of self made questionnaire. The statistical tools applied are analysis by percentage and cross analysis Measurement Of Variables Financial literacy of the respondents were focused which indicates their basic knowledge, understanding,and use of financial products. Table1. Percentage of respondents of different age group. Categories (age groups in ) Percentage of respondents % % % % In India the major age attended for women is 18. Therefore, working women above 18 of age are considered. The sample has been classified with interval of 10 the last category. Maximum age of respondents is taken as 60 assuming that 60 year is the retiring age of Indian working women. Thus, age from major to retiring age of working women have been All Rights Reserved 155

3 Table2. Respondents on the basis of marriage status and annual income Status Married 73% Un-married 27% Annual income level(as per income tax slab) Below2,50,000 28% 2,50,000-5,00,000 36% 5,00,000-10,00,000 19% Above 10,00,000 17% In table2, number of respondents are classified on the bases of normal rates of income tax slab of female below 60 of age at any time during the financial year Thus working women from all major age groups and income groups, married and unmarried, have been included in the sample. V. ANALYSIS AND RESULTS The data collected was encoded and tabulated. It was exposed to statistical tools like percentage analysis and cross analysis. Table1 shows the percentage of respondents belonging to different age groups and table2 shows the percentage of respondents on the basis of marital status, 73% are married. It also shows the percentage of respondents belonging to different income groups. 1. Literacy about Financial products Literacy was checked against 3 important categories, i.e. investment products, credit products and insurance products. [FD-Fixed Deposit,RD- Recurring Deposit,SA- Saving Account,PPF-personal Provident Fund, OPS- Other Postal Scheme, MF-Mutual Fund, SB-Shares and Bonds, NPS-National Pension All Rights Reserved 156

4 Figure 1 clearly shows that cent percent of the respondents have the basic knowledge of Fixed deposits and saving account and all of them hold an saving account whereas 87% possessed FD.65% know about PPF while only 35% had their PPF account.32% of the respondents had basic knowledge about mutual funds and only 12% of them had invested in mutual fund schemes. Almost 81% know about postal schemes but 63% possessed them. Less than one third of them have the basic knowledge about shares and only 3% held it. Basic knowledge about National Pension Schemes (NPS) was known by only 8% and no one held it. Surprisingly 95% 0f respondents had the basic knowledge about RDs but only 22% possessed it. 2. Basic knowledge of credit products It is observed from Figure 2 that majority of respondents have the basic knowledge of credit products except the Reverse mortgage loan. There is high percentage of holding of Vehicle loan and moderate percentage of holding in housing loan and credit card whereas holding percentage of personal loan is low.educational loan and reverse mortgage loan show very low percentage of All Rights Reserved 157

5 3. Literacy about Insurance products. From figure 3,it is quite clear that 100% of the working women have the basic knowledge of life insurance but only 83% held life insurance policy. 68% of the respondents have the basic knowledge of health insurance but only 11% held it. 32% of the respondents have the basic knowledge of crop insurance but only 2% held it. Table3. Cross analysis table of no. of respondents. Particulars (18-28) (28-38) (38-48) (48-60) Total I.Investment Products i)fixed diposit ii)r.d iii)saving account iv)ppf v)mutual fund vi)nps vii)shares and bonds viii)other postal schemes II Credit products i)personal loan ii)vehicle loan iii)educational loan iv)housing loan v)reverse mortgage loan vi)credit cards III Insurance Products I)Life insurance ii)health insurance iii)general insurance iv)crop insurance After the overall analysis, an attempt was made to identify the influence of age of respondents on their basic knowledge of financial products. Table3 and table4 shows briefly the extent of basic knowledge of number of respondents within each of the age categories. All the respondents of all the age groups have a good basic knowledge of investment products like fixed deposit and Saving account and recurring deposits,credit products like vehicle loan and insurance products like life insurance. On the other hand, very less respondents seem to have basic knowledge about NPS and Reverse mortgage loan in all age group of them but seems to increase as the age increases. In other words, All Rights Reserved 158

6 number of younger respondents know about NPS and Reverse mortgage loan. Number of respondents having the basic knowledge of Crop insurance are less and seem to be nearly same in all age groups of respondents. Number of respondents having the basic knowledge of Credit cards is decreasing as the age increases i.e. less number of older people know about credit cards. Table4. Cross analysis Table on % basis. PARTICULARS Age groups ( in %) Overall (18-28) (28-38) (38-48) (48-60) percent of total no. of respondents I.Investment Products i)fixed deposit 100% 100% 100% 100% 100% ii)r.d. 84% 95% 100% 100% 95% iii)saving account 100% 100% 100% 100% 100% iv)ppf 68% 75% 67% 52% 65% v)mutual fund 44% 40% 23% 24% 32% vi)nps 4% 15% 7% 8% 8% vii)shares and bonds 40% 35% 23% 28% 31% viii)other postal schemes 88% 85% 83% 68% 81% II Credit products i)personal loan 76% 85% 73% 56% 72% ii)vehicle loan 100% 100% 100% 100% 100% iii)educational loan 60% 35% 20% 16% 32% iv)housing loan 96% 95% 100% 100% 98% v)reverse mortgage loan 0% 0% 7% 16% 6% vi)credit cards 84% 80% 33% 32% 55% III Insurance Products I)Life insurance 100% 100% 100% 100% 100% ii)health insurance 72% 70% 73% 56% 68% iii)general insurance 92% 95% 83% 80% 87% iv)crop insurance 24% 35% 33% 36% 32% VI. CONCLUSION It is well known that financial well being of women is one of the pillars of her empowerment. Financial well being depends on her sound financial decisions which in turn depends on her knowledge and financial literacy. From the study, it can be concluded that working women have good basic knowledge about risk free investment products like FD, Saving account and RD. They are found to be more inclined towards saving account.they have very less basic knowledge about risky investments like shares& bonds and mutual funds. NPS scheme is very poorly known among them. However, credit products like housing loan, vehicle loan and personal loans are better known among the respondents. Vehicle loan shows a high percentage of holding, House loan and credit cards show moderate percentage of holdings and holding of educational loan and reverse mortgage loan are in single digit percentage. So, it can All Rights Reserved 159

7 concluded that with the growing participation of women in the working population of India and with the increasing need of their empowerment, they ought to be financially literate. This, in turn, suggests that women investors need to be exposed to better financial education. This will surely give a momentum to the journey of women empowerment. Only 100 working women participated in the study and it has been done only in Raipur city The study does not consider the investment option of gold, real state,debentures etc. This study does not consider the calculation of interest/income, time value of money, diversification of investment and cost benefit relation..all other limitations of survey method are applicable. REFERENCES 1. M. A. Lokhande(2015), A study of investment awareness and pattern of savings and investments by rural investors, Indian Journal of Finance, 9(7), 22-31, DOI: //2015/v9i7/ National Council of Applied Economic Research, 2011, How households save and invest: Evidence from NCAER household survey retrieved from 3. P. Paramshivaiah Puttaswamy and S.K.Ramya, 2014, Changing risk perception of women investors :An empirical study.indian Journal of Finance, 8(6), DOI: /ijf/2014/v8i6/ Sadhna Bagchi & Debashish Mukherjee(2016).Investment references & Risk bearing capacity of salaried person: Gurukul Shodh Srijan,vol3,issue3. 5. Aparna Bhonde Saraf, Are women financially educated?a study with reference toearning women of Aurangabad district, Maharashtra.Indian journal of Finance, March(2016). 6. N.V.Vijaykumar and Gajendra J.Naidu, Does Micrifinance Training Enhance the Financial Literacy Among Members of Self Helf Groups?, Indian Journal Of finance,july (2016). 7. Vimala Ramchandran, Women & Girls Education:Issues in India, Yojana, Jan (2016). 8. Sarita Bara, Women And Panchayati Raj System, Kurushetra, All Rights Reserved 160