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Financial Literacy and Financial Inclusion

Financial literacyFinancial inclusion denotes delivery of financial services at an affordable cost to the vast sections of the disadvantaged and low-income groups. The various financial services include credit, savings, insurance and payments and remittance facilities. The objective of financial inclusion is to extend the scope of activities of the organized financial system to include within its ambit people with low incomes. Banks are expected to cover 50% of the financially excluded households by 2012 i.e.55.77 million and the remaining households are to be covered by 2015.

However, in order to meet the financial inclusion targets, it is necessary to impart financial literacy to the poor excluded people. According to OECD, “ Financial Literacy is the combination of consumers’/investors’ understanding of financial products and concepts and their ability and confidence to appreciate financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being”.

In accordance with the recommendations of the Report of the Committee on Financial Inclusion, NABARD has set-up two funds, namely the Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF), each with a corpus of Rs. 500 crore. This affords opportunities for AFC in rendering services to banks and NABARD in the realisation of their objectives towards Financial Inclusion and Financial Literacy.

AFC has has undertaken the following assignments in this domain:

Financial Literacy Programme in Murshidabad District, West Bengal

NABARD has awarded AFC a Financial Literacy Programme in Murshidabad district in West Bengal focused on rural adults especially women. The entire package has been designed to leverage on the existing infrastructure created and/or supported by Government of India and respective State Governments. This awareness programme is being implemented through Self Help Groups and Farmer Clubs.

The Financial Literacy Programme has been structured to support the participants’ progress towards meeting their savings and asset goals. The training will also provide programme participants with opportunities to develop skills and acquire knowledge necessary to effectively manage their own financial situation.

Keeping the project requirements in mind, AFC proposed to adopt a blended approach to learning and imparting financial literacy. The program design will be in local language i.e. Bengali. Reserve Bank of India has launched a series of Financial Literacy drives. Some material published by Reserve Bank of India in various national languages, use of role-plays etc. will be made use to make the programme more interactive and useful for participants.

The Financial Literacy Programme covers about 21000 youth through SHGs and Farmers’ Club (FC) in 7 talukas of Jangipur Tehsil of Murshidabad district (West Bengal). Members from identified SHGs/FCs will be trained as master trainers and in turn they will provide training to the rural youth. The training will cover broadly the following aspects :

  • Awareness about money Management
  • Money
  • Cash flow
  • Basic economic/ financial concepts
  • Thrift and savings
  • Attitude building towards financial security
  • Healthy investment and retirement funds
  • Free from indebtedness