RBI Releases 5 Year National Strategy For Financial Education – Free PDF Download

OECD- Financial Literacy & Financial Education

• Financial Literacyis defined 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.

Background and Rationale of NSFE

• India has a large population of adults.
• This demographic advantage can be leveraged to ensure that India becomes one of the fastest growing economies.
• Since a large number of stakeholders are involved in spreading financial literacy,
• A broad National Strategy for Financial Education (NSFE) is a pre-requisite to ensure that they work in tandem.

So what exactly is NSFE?

• It is defined as “a nationally co-ordinated approach to financial education that consists of an adapted framework or programme”.
• The NSFE document intends to support the vision of the Government of India and Financial Sector Regulators by enabling various sections of the population,
• To develop knowledge, skills, attitude and behaviour which are needed to manage their money better and to plan for their future.
• This is the 2^nd National Strategy for Financial Education.
• The first one was released in the year 2013 till 2018.

NSFE 2020-2025

• It has been prepared by-
• The National Centre for Financial Education (NCFE) in consultation with
• All the Financial Sector Regulators (RBI, SEBI, IRDAI and PFRDA), DFS and other Ministries of Govt. of India and other stakeholders (DFIs, SROs, IBA, NPCI) under the aegis of-
• The Technical Group on Financial Inclusion and Financial Literacy (TGFIFL) under the Chairmanship of Deputy Governor, RBI.
• NCFE is registered as a Company under Section 8 (Not for Profit) of the Companies Act, 2013
• Promoted by RBI, SEBI, IRDAI and PFRDA.
• So, the multi-stakeholder led approach document released by RBI has recommended a ‘5 C’ approach for dissemination of financial education in the country.
• The five Cs, outlined by the strategy paper, are:
• Content, Capacity, Community, Communication and Collaboration.
• Content (including curriculum in schools, colleges and training establishments).
• Developing Capacity among the intermediaries involved in providing financial services,
• Leveraging on the positive effect of Community led model for financial literacy through appropriate Communication
• Enhancing Collaboration among various stakeholders.
• The Strategy also suggests adoption of a robust ‘Monitoring and Evaluation Framework’
• to assess the progress made.
• The NSFE document has been approved by the FSDC in its 24th meeting, held on
• June 18, 2020, the RBI said.

What is FSDC?

• First mooted by the Raghuram Rajan Committee in 2008.
• Finally in 2010, the then Finance Minister, Pranab Mukherjee, decided to set up such an autonomous body dealing with-
• Macro prudential and financial regularities

Latest Burning Issues | Free PDF

Sharing is caring!