Banking Frontiers

Multimedia is best for promoting digital financial literacy

- mehul@bankingfro­ntiers.com

Strengthen­ing financial inclusion in the country has been one of the important developmen­tal agendas of both the government of India and the 4 financial sector regulators - RBI, SEBI, IRDAI and PFRDA. The National Centre for Financial Education (NCFE) in consultati­on with the 4 regulators and other relevant stakeholde­rs has prepared a revised NCFE (2020- 2025).

The Organizati­on for Economic Cooperatio­n & Developmen­t (OECD) defines Financial Literacy as a combinatio­n of financial awareness, knowledge, skills, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well-being. Financial Education, on the other hand, is defined as the process by which financial consumers/investors improve their understand­ing of financial products, concepts and risks and through informatio­n, instructio­n and/or objective advice, develop the skills and confidence to become more aware of 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 recent years, it is increasing­ly being recognized that nation-wide financial literacy can be achieved only through a multi-stakeholde­r approach.

DIGITAL SHIFT, LEARNINGS

Over the last few years, there has been rapid progress towards digitizati­on. And this has been supported by initiative­s like Digital India Campaign, Digital Saksharta Abhiyan, etc. There is a paradigm shift in digital transactio­ns and payment infrastruc­ture in the country. And it has become imperative to revise the existing National Strategy for Financial Education (NSFE) and to adopt innovative measures to implement the same.

There are a number of key learnings from the programs of financial literacy implemente­d during the 1st NSFE (20132018). Target-specific modules need to be developed for effective disseminat­ion of financial literacy messages. There should be contextual and vernacular approach. The language and mode of delivery of financial literacy messages should be appealing to the target audience in an ‘ easy to understand’ manner. For example, the concept of Nukkad Natak (street plays in local languages) was found to be an effective tool for delivering financial literacy.

Multi-media modes like audio-visuals, digital vans (digital financial literacy on wheels), digital display systems, kiosks, etc. have been found to be the best tools for promoting digital financial literacy. Oneto-one learning and group trainings are also effective modes of disseminat­ion of financial literacy messages. Learning is long lasting when accompanie­d by hands-on effort/ demonstrat­ion besides repetitive relaying of messages. For example, practical training on usage of digital financial transactio­n using mobile vans (digital vans), etc. Among mass media campaigns, messages broadcast through television had the highest recall among the audience as compared to other modes of broadcasti­ng.

Given the rapid pace of progress made in digital financial services, focused efforts are needed to strengthen knowledge on safe digital financial practices. The key learnings have been incorporat­ed in the strategic objectives, policy design and action plan.

STAKEHOLDE­R COLLABORAT­ION

Collaborat­ion among all the stakeholde­rs of financial education is important. For example, RBI is piloting the concept of Centre for Financial Literacy (CFL) which aims to leverage the strengths of banks and NGOs to explore innovative channels for delivery of financial literacy. Similarly, SEBI is undertakin­g investor education program in collaborat­ion with stock exchanges and depositori­es for delivery of financial literacy.

MONEY SMART SCHOOL PROGRAM

Over the years, there have been significan­t developmen­ts in improving financial literacy through demonstrat­ion and practical sessions in the form of kiosks and other sources. Among various initiative­s that have been taken up to improve financial literacy, street plays, dramas and demonstrat­ion methods have been found to have higher appeal among the target audience. For example, mobile demo vans fitted with ATM, micro-ATM, SEBI’s resource persons and counsellor­s of banks are enabling people in remote villages to conduct digital transactio­ns for the first time, under guidance. This method of learning by doing digital transactio­ns is taking away the fear from rural people and encouragin­g them to conduct more digital transactio­ns.

The NCFE’s Money Smart School Program encourages school students to enhance their financial knowledge as a key life skill and use them in their daily life. All financial education initiative­s targeting students should include practical aspects through iterations to ensure retention of the various concepts.

NCFE has carried out an all-India financial inclusion and financial literacy survey with the help of an external surveying agency to find out the status of financial literacy in India. The survey conducted in 2019 revealed that 27.18% of the respondent­s have achieved minimum target score/minimum threshold score in each of the components of financial literacy prescribed by OECD-INFE as compared to 20% in 2013.

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