Ranjan Varma

Financial Inclusion & Financial Literacy: Intentions & Realities July 14, 2010

The newspaper today has stories on financial inclusion and financial literacy. This post is about my thoughts on the noble intentions v/s the hard realities in the areas of financial inclusion and financial literacy.

Mumbo Jumbo? Finance Minister Pranab Mukherjee described the FE Best Banks Awards function held yesterday as having evolved into a “popular event” for India Inc to highlight the importance of bringing banking to those “who need the very basic financial services.” He said that the event could significantly contribute towards highlighting the importance of expansion of banking activities for economic development.

High sounding words: Speaking about financial inclusion, the Finance Minister said competing needs for the financial resources required for high growth necessitate that these resources should be used at the maximum possible efficiency.

“The financial intermediation for these financial resources should be cost-efficient and allocation efficiency should be high,” Mukherjee said.

My Questions: It’s all good to network and celebrate performance. But I fail to understand the connect between the celebrations and the financial inclusion part. I don’t really understand the rhetoric. Am I fast becoming a dyslexic? What about you? If you are able to make sense of the high sounding words, please educate me.

As an aside, the Akshaya Patra Foundation in India has found a way to feed a child daily for the entire school year on just $28. (Source)

As another aside, the event cost of the Awards would be in crores. Just a rough guess.

As aside no.3, I quote Subramoney on the poor small investor, “small investor, financial literacy, financial awareness, financial inclusion….what an amazing array of words we have created for bureaucrats, politicians, businessmen, capital market pundits to meet and eat!

Next is Financial Literacy. Here’s another high sounding quote:

U K Sinha, CMD, UTI AMC said, “Swatantra’ is India’s Journey to financial freedom and is the largest investor campaign in the country which will cover over 300 cities in 100 days through 100 investor meets. Financial Education is very crucial for the growth of India’s capital market and India will progress at a faster pace if there is higher retail participation in the capital markets. This Campaign will target inculcating financial literacy to potential investors which will help them to take informed decisions.”

My take:
Handing out visually beautiful brochures about the do’s and don’ts of finance does not help the small investors take informed decisions. Financial decisions are personal and you need to understand each individual’s situation to help him make an informed decision. A town hall method of imparting financial education will be totally ineffective.

Further, the financial education needs to be unbiased and independent. But who will be the resource persons for imparting the education. My feeling is that the Branch Heads of the UTI Branches across the country (having stiff sales targets) will be used. What will they do other than selling UTIMF products to the investors.

Conclusions:
There’s a wide disconnect between noble intentions and hard realities. If wishes were horses, beggars would ride, an English language proverb , clearly suggests that it is useless to wish; better results will be achieved through action.

But here the action itself is useless, IMHO. A lot of effort needs to be taken to design a financial literacy program. What do you say?

Thanks for reading. Please check out our financial planning workshops and You can send us email for details about the workshops and book.

Connect with Ranjan Varma

Ranjan Varma has written 468 post on this blog.

Ranjan Varma has over 20 years of work experience in the financial services industry. Ranjan has worked with LIC & LIC Housing Finance in various positions like Branch Manager, Manager Sales, Area Manager, Deputy Regional Manager, etc. Ranjan has experience working in areas like Sales, Marketing, Investments & HR. Ranjan Varma has been interacting on his blog @ http://ranjanvarma.com since 2007, with posts on how to manage money. Ranjan Varma edits a personal finance website and has built products & tools for financial management @ http://rupeemanager.com. Ranjan also delivers training on personal finance. Ranjan has spoken at various seminars/workshops at Corporates and many Educational Institutions. Ranjan believes in Vipassana, a way of self-transformation through self-observation (to see things as they really are). Ranjan also aspires to create new businesses & projects from time to time.

Blogger PostLinkedInTwitterFriendFeedFacebookEmailShare/Save
close

Financial Inclusion & Financial Literacy: Intentions & Realities

1 Comment

  1. Pingback: Why I Have A Problem With Authority | Ranjan Varma's Blog

Leave a Reply

Ranjan Varma

Ranjan Varma has over 20 years of work experience in the financial services industry. Ranjan has worked with LIC & LIC Housing Finance in various positions like Branch Manager, Manager Sales, Area Manager, Deputy Regional Manager, etc. Ranjan has experience working in areas like Sales, Marketing, Investments & HR. Ranjan Varma has been interacting on his blog @ http://ranjanvarma.com since 2007, with posts on how to manage money. Ranjan Varma edits a personal finance website and has built products & tools for financial management @ http://rupeemanager.com. Ranjan also delivers training on personal finance. Ranjan has spoken at various seminars/workshops at Corporates and many Educational Institutions. Ranjan believes in Vipassana, a way of self-transformation through self-observation (to see things as they really are). Ranjan also aspires to create new businesses & projects from time to time.

Financial Inclusion & Financial Literacy: Intentions & Realities July 14, 2010

Contact


Search