Government policies financial inclusion-India
Government policies financial inclusion-India: Despite having the world’s most efficient technological system and highest savings rate Indian financial market is weak, unstable and imperfect. Though Indian households are potential savers, they are potential investors but they are not financially literate. Even after 60 years of independence, a large section of Indian population still remains unbanked. The majority of our households are not using modern financial markets because they are lacking in basic knowledge of finance.
Overview of Government policies financial inclusion-India:
The Government and policy makers are focusing on financial inclusion to promote savings, to provide credit facilities, to plug the gap and leaks in subsidies and welfare programs. They want to enrich banking ecosystem, they want to reach vulnerable groups such as weaker sections and low-income groups. But to bring financial inclusion, financial literacy is one of the important and crucial components. If a person is not aware of financial policies, schemes, alternatives and financial instruments, he can’t snatch the benefits and cope up risks coupled. According to the survey in 2014 by Gallup (an American research-based, global performance-management consulting company), it was found that only 24% of Indians are financially literate. Other 76% Indian adults do not even understand key financial concepts like numeracy, risk diversification, inflation, and compound interest etc. adequately.
The need of Government policies financial inclusion-India:
Financial literacy helps an individual in understanding how to use credit responsibly, manage money, minimize risks and increase access to finance for the poor. Central Bank, SEBI, IRDA, Mutual fund Industry, NSE and other various financial or nonfinancial institutions are stressing on improving financial education or literacy.
RBI’s role in Government Policies Financial Inclusion-India:
Reserve Bank of India Governor Raghuram Rajan has also proposed the inclusion of financial literacy in school and college curriculum. Still, there is need of some flexible financial literacy programs which can be customized according to the individual’s requirements and different stages of the life cycle as one standardized program can’t fit all. Getting the right opinion at the right time and with the right approach is the key to getting success in the financial market and to make it stable and strong.