This study evaluates the scope of different financial literacy training programmes that are being implemented across India, from both an implementer’s and beneficiaries’ perspective.
Background
Managing Finances efficiently is a skill that only a few people are able to cultivate and practice. This complex skill requires a mixture of financial knowledge, financial awareness and financial aptitude. The first two of these three can be fed in through information sharing, education and awareness generation campaigns but the third one develops over time and requires assistance from an expert. The package of all these ingredients being provided through the required mechanisms can be called a Financial Literacy Training. The role of Financial Literacy in improving the ability of people (especially low-income people) to manage their cash flows and to make judicious financial choices has been widely acknowledged and in wake of this, various financial literacy training programmes are being designed and implemented across the country. This study was conducted with the objective of understanding the scope of different financial literacy training programmes that are being implemented across India, from both an implementer’s and beneficiaries’ perspective.
Approach
To fulfil the primary objective of the study, contents of various financial literacy modules that are currently being offered to the beneficiaries were analyzed to understand the basic topics, methods and other elements that are being used. Management interviews were conducted with the person/ team in charge of development and implementation of FLTs to get a deeper understanding of how these modules were developed and get the organizational perspective on financial literacy training.
A short survey of beneficiaries of FLTs was conducted at the client level for selected organizations to understand the levels of financial capabilities, behavior and numeracy and financial product awareness among FLT beneficiaries. Finally, a short web survey was also conducted to get a sense of how many MFIs in India self-report that they conduct financial literacy training and what kinds of topics they cover.
Implications
While the Government has instituted some initiatives in this regard, these have not been able to successfully reach out to the numbers targeted. The study highlights the needs to communicate the idea of financial literacy and its objective clearly to those who are being accorded the responsibility (like FLCC Centres) of imparting financial literacy. The College of Agricultural Banking is working towards creating a promising platform that can be used as a hub of information with all the developing and implementing agencies sharing their modules, ideas, innovations and experiences
Key Findings
Findings from the study point at a demand-driven approach, subject to modifications based on community feedback, being adopted by most of the participating organizations. ‘Savings’ and ‘Borrowing’ were found to be the most popular topics, with important topics such as ‘Insurance’, ‘Pensions’ and ‘Investments’ not receiving enough attention. Planning and Budgeting was another common theme that lacked extensive follow up with trainees, a process much required owing to its complexity. On the methodology front, innovative methods are coming up with most of the initiatives proving to be successful. But there is a dearth in a platform or network to share these initiatives, which thus end up being used only with some isolated samples of the target community. From interviews with beneficiaries, a gap between their perceived financial capability and actual financial ability was also observed. Apart from numeracy, beneficiaries scored low in all other subjects, especially those pertaining to money management and knowledge of formal financial products.