RBI Releases 5 Year National Strategy For Financial Education

Table of Contents

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.

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.

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.

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.

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