In India, financial awareness among the common man and among investors is very low. It has become a matter of concern among the organizations and even the Securities and Exchange Bureau of India (SEBI). Other important matters of concern include lack of penetration, tough market condition and changes in regulation. The organizations in the financial service sector have decided to adopt a strategy of increased penetration to improve the awareness and education among the common man. To promote this, SEBI has brought back the system of incentives for the distributors.

The regulations introduced by regulators

Even though the regulations introduced by the regulatory bodies have benefited the investors, the rapid changes that are brought in the regulations are of great concern. The recent directive by SEBI that enables the distributors to levy transaction fees of Rs. 100 to 150 for minimum investment of Rs. 10,000 did not generate the expected response from the distributors as of now.

The need for educating the investors or creating financial literacy is not discussed in detail, even though it is a matter great concern to the industry and SEBI.

Financial literacy is important in India

In a country like India which has a fast growing economy and is set to become a developed nation in the near future, it is highly essential that the citizens of the country should be proficient in finance. There are few organizations that have taken the initiative to educate the common man in the area of finance. One such organization is India Infoline, which has introduced Financial Literacy Agenda for Mass Empowerment (FLAME) which is aimed at developing financial literacy among the common man, with increased attention on students. Experts from India Infoline says that the present syllabus that is being followed in schools do not provide any learning in the direction of real world money management. They also say that the financial literacy in the country is far worse than the overall literacy.

The initiative by India Infoline

To overcome these shortcomings, India Infoline has introduced a certificate course known as Financial Literacy for Students. This course is intended for the students from classes VIII, IX and X across India. Thecourse is developed in cooperation with over 30 educational institutions, including Kendriya Vidyalaya. It is developed in such a way that the course will give basic financial knowledge to students.

Another course under the FLAME initiative is a six month programme which is conducted in cooperation with KJ Somaiya Institute of Management Studies. The objective of the programme is to impart financial knowledge to the underprivileged. This programme is offered free of cost to the candidates and the medium includes English and Marathi.

They have also introduced financial helpline and are also developing content for the financial education of the common man as a part of the FLAME initiative. Other activities include FLAME meets, and live chats. They are making use of all channels and mediums to promote financial education. It includes both online and offline channels.

The goal is to equip the common man with financial knowledge so as to make them self sufficient to make the most out of banking and other financial services. It is essential for making the general population a part of the financial and economic growth of the nation.

CBSE to include financial education in schools

The Central Board of Secondary Education (CBSE) is planning to incorporate financial education in the schools following the CBSE syllabus from the next academic year onwards. So from next academic year onwards school going students will have to study the complications associated with financial products and the related moral hazards too. For instance they will learn not only stock market trading, but also about insider trading, which is treated as a criminal offence.

The Central Board of Secondary Education (CBSE) has decided on the contents of the programme in cooperation with the Ministry of Finance and the regulatory bodies.

So far, the Reserve Bank of India, Securities and Exchange Board of India, Central Board of Direct Taxes had been working independently on financial literacy programmes that are directed at different groups in the population. A government official said that financial literacy is very important for achieving inclusive growth in the country. Inclusion cannot be achieved by just opening bank accounts; it also includes various activities in the stock market and insurance products.

Making the course interesting

The course is designed in such a way that it will not overload the students in terms of their syllabus. The course will consists of projects, quizzes, essays, and online contents will make it interesting for the school going students. The course is intended to expose the problems associated with financial investments which include bait and switch.

Financial literacy and financial inclusion

Finance Minister Pranab Mukherejee had emphasized on the need for including financial lessons in the school education and said that it is essential for financial inclusion. He noted that one of the reasons for the economic recession is the lack of knowledge among the common man in the areas of financial products and credit card debts. The financial market now has in store many offerings which are difficult for the common man to understand, and such financial education will help the common man to take informed decisions.

Experts in the field of education say that financial education at schools is the best way to make the students financially literate and responsible from a younger age.

According to Ameeta Mulla Wattal, principal, Springdales School, Delhi, making financial learning a part of the electives will help the students in getting a proper understanding of income, expense, saving and globalization.

Since the common man in India lacks financial literacy, it has now become the duty of the financial regulators to organize campaigns to ensure that the investors are well informed about the complexities involved in investments and are prevented from being victims of frauds.

Let us hope that such initiatives undertaken by organizations and the education boards will help the common man in acquiring basic financial literacy and will help in financial inclusion and thus the financial development of the country.