Asst. Prof. Prajakta Joshi
N-12, Maurya Vihar, Near Sahajanand Society, Kothrud, Pune -38 Email – firstname.lastname@example.org
Contact no. - 9371207428
The way of Financial Capability is through financial literacy: Indian and Global Scenario
In every stage of life people face challenges to take certain financial decisions. Financial illiteracy is inability to make informed judgments and effective decisions regarding the use and management of money and wealth which affects their family and society at large.
It is utmost important for a country to take steps for financial literacy in order to improve the standard of society society and economy of the nation. Financial literacy is the set of skills and knowledge that allows an individual to take appropriate financial decisions.
The objective of the research is to understand financial literacy and its importance. It also aims to understand the current financial literacy initiatives that are taking place in India and other parts of the world.
Financial literacy is more important in country like India where large chunk of population is illiterate hence they do not have easy access to formal financial set up. This population has lack of knowledge about financial planning. The Indian government has insisting on the need for financial literacy and generating confidence among people who burnt their fingers by taking wrong decisions.
The promotion of financial literacy in developing countries is timely and can be a win-win situation for poor people and financial service providers alike.. Financial literacy skills can be applied everywhere viz. managing a wide range of individual, household, business, and community resources. The effective financial literacy is the best tool to help the society to deal with future needs as well as to deal with contingencies.
Key Words: financial literacy, financial education, financial programs, financial planning
Financial decisions can be rigorous task. Making financial choices by comparing savings or borrowing options with different interest rates and term structures can cause a certain level of discomfort. Sometimes a knowledgeable individual may need to rely on calculators or spreadsheets to make truly informed decisions.
Investment decision involves some amount of risk; hence the number of investors are less as compared to the rate at which markets in India are growing. People hesitate to invest due to lack of awareness and proper knowledge of financial services available in market. This uncertainty is due to lack of information and understanding of investment basics. Creating informed investor is the major challenge for constant growth of Indian economy.
Investments may be in the form of fixed deposit, real estate, gold, mutual fund, bond and shares. As per Indian scenario people are least interested in investment is share market due to lack of knowledge. Only 1% of Indian population is active investor in capital market. Government of India has already taken steps to increase the awareness and knowledge of the population through various investor education programs. Financial literacy programs that teach individuals how to spend save and budget responsibly. These initiatives should reach to the root level of Indian population. The awareness should spread among the farmers that consist of 70% of Indian economy.
1. To understand the financial literacy and its importance.
2. To learn about the Initiatives for Financial Literacy in the global context.
3. To study the efforts taken by various institutions for Financial Literacy in India.
Lusardi and Mitche (2006, 2007), have conducted basic financial literacy test for both U.S. and other countries and their research shows that...