Structure of the presentation

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2 Structure of the presentation Issues in Financial Literacy in India Financial Access-itself an important Communication Channel A different mix of content of Financial Literacy material for financially excluded, financially included and financial market players Measurement of effectiveness of Communication Channels Channels used in India for Communicating Financial Literacy messages

3 Issues in Financial Literacy in India - (1/3) A large population of alphabetically illiterate population - requiring basic financial knowledge A large section of financially excluded population- need to be told of benefits of financial inclusion and also to be provided

4 Issues in Financial Literacy in India - (2/3) A large growing segment of educated middle class-requiring financial education A growing capital market with increasing retail participationrequiring financial education and consumer protection

5 Issues in Financial Literacy in India - A growing insurance market with participation of private players - need consumer protection and financial education A large section of workers having no pension (3/3) A move from Defined Benefit Pension Schemes to Defined Contribution Pension Schemes Hence, a large workforce need to be told about riskiness of various investment portfolios

6 Financial Access Messages of Financial Literacy without access may not mean anything Use of basic products of savings, credit, remittance etc. is a good example of Learning while you Use Banking, being tightly regulated with deposit insurance is the right way to start Financial Learning through access

7 Financial Access Cont. The places or points of financial access like branches, ATMs, POS machines provide great opportunities for spreading messages of Financial Literacy Financial access and resultant financial gains work as Word of mouth Communication Channel of Financial Literacy

8 Why Save? Content of Financial Literacy material Simple messages of financial awareness for excluded sections Why save regularly and consistently? Why start saving early in your life? Why save with banks? Why borrow within Limits? Why borrow from banks? Why borrow for income generating purposes?

9 Content of Financial Literacy material - Simple messages of financial awareness for excluded sections - cont Why repay loans? Why do you need insurance? Why you will need regular stream of income post working life pension? Why you should keep money aside regularly and consistently during your earning life for pension in old age? What is interest? How moneylenders charge very high interest rates?

10 Content of Financial Literacy material Cont.. Concept of Risk for financially included sections How to use safe and appropriate products and services Understand the risk-return tradeoff : Higher the returns Much higher is the risk Don t keep all your eggs in one basket- Diversify your portfolio Don t take the risks you don t understand

11 Content of Financial Literacy material Cont.. Messages for financial market players Why customer is important? Understand the risks of products and services you provide The higher the returns much higher is the risk Understand the ability of customers to take risks Assess and build up the capability of customers to avail the products within the acceptable framework of risk-return tradeoff

12 Content of Financial Literacy material Cont.. Lessons on Consumer Protection and Grievance Redressal Systems Various Consumer Protection Systems like District, State and National Consumer Disputes Resolutions fora Various Grievance Redressal bodies like Banking, Insurance, Capital Market and Pension Ombudsman

13 Use of various channels and delivery mechanisms Holding Financial Literacy Camps Participating in Fairs and Village events Establishing FLCCs and RSETIs 429 FLCCs and 509 RSETIs established as at end of March 2012 Performing Skits and Street Corner plays Outreach /Public Contact Programmes 115 Outreach visits to unbanked villages undertaken by Top Executives of RBI till the end of March 2012

14 Use of various channels- 2 Holding Newsibitions Town Hall Events- Top Management of RBI interacts and answers questions from public Visits to Schools and Colleges by Bank Officials Visits by School and College children to Banks Inclusion of Financial Literacy in School Curriculum Holding Quiz Competitions Distributing Books and Pamphlets on FL Awareness Campaigns by Banking Ombudsmen

15 Effectiveness of Communication channels - measurement Knowledge impacts behaviour and so financial knowledge should lead to prudent financial behaviour, though we do not always behave rationally One way to measure the effectiveness of financial Literacy at base level could be extent of inclusion With large number of people financially excluded in India, the extent of inclusion is an important measure of success of FL efforts for us Another measure for us is use of consumer fora and ombudsmen system Other measures apart from surveys, quizzes, interviews etc. could be reduced financial frauds etc.

16 Financial Literacy Delivery Channels-Holding Financial Literacy Camps

17 Financial Literacy Delivery Channels- RBI participation - distributing financial literacy booklets at village fair (Inauguration, Visitors at the stall, Exchange of notes and coins)

18 Financial Literacy Delivery Channels- By Performing financial learning Skits, Plays with song and dance etc

19 Financial Literacy Delivery Channels- Outreach/Public Contact Programmes

20 Financial Literacy Delivery Channels- FLCCs and RSETIs Banks are imparting simple messages of financial literacy and credit and debt counseling through A. A FLCC each set up across 429 districts as on March B. Rural Self-Employment Training Institutes (RSETIs) - to provide cluster based training to the prospective beneficiaries. 509 RSETIs set up as on March 2012.

21 Financial Literacy Delivery Channels - Educating the Generation Next

22 Awareness Campaigns 15 offices of Banking Ombudsmen conduct Awareness Campaigns for common bank customers To educate about the Banking Ombudsman Scheme To Make common people aware about the Grievance Redressal Mechanism in banks Documentary films, street plays, illustrative posters, banners, pamphlets are some of the tools used in such campaigns Similar programmes by Insurance and Capital Market Regulators

23 Town Hall Events Organised by Reserve Bank in co-ordination with banks to boost up its financial education efforts especially in corners of the country where RBI has no offices. Audience include students, bank customers, academics, customer organizations, pensioner associations, trade / industry bodies, press and media persons, Self Help Groups etc. Five such events conducted so far during this year.

24 Financial Literacy Delivery Channels- Newsibitions

25 Financial Literacy Delivery Channels Distributing books and educating through pamphlets

26 Consumer Protection In whose Interest? In the interest of service providers also. For business to survive, customer must survive. Most important area for Consumer Protection is pricing of products and services. Regulation has to ensure that pricing is transparent, non-discriminatory, non-exploiting and affordable. 26

27 Trinity to make Financial Stability Possible Financial Inclusion Financial Stability Consumer Protection Financial Literacy Effective Communication Strategy must link Financial Inclusion, Financial Literacy and Consumer Protection 27

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