Financial education has become an important life skill necessary for every human being for leading a quality life. Hence, countries all over the world are giving utmost priority for its inculcation among their citizens.

Financial illiteracy is not only limited to underdeveloped countries but also afflicts developing and developed countries. Financial inclusion is a key component of a successful national strategy for any country which is possible through an increase in the financial literacy made by financial education. 

According to a consortium of researchers, 2.5 billion adults, nearly half of the world’s 4.7 billion adult population, are not aware of the use of formal financial services or the concepts of savings and investment.

Around 2.2 billion of these financially  illiterate adult live in Asia, Africa, Latin America and Middle East. The OECD/INFE International Survey of Adult Financial Literacy Competencies revealed that only 42 per cent of adults are aware of the compounding interest on savings and 58 per cent are able to calculate simple interest. Knowledge of household budget is known to 60 per cent adults and only 50 per cent are having long term investment.

In India, the S&P Survey says that more than 75 per cent of Indian adults do not understand basic financial concepts. More than 80 per cent of our female population are financially illiterate.

 In this background, a thrust on a national strategy for financial education become essential and the National Centre for Financial Education (NCFE) prepared the NSFE 2020-25 in consultation with the apex financial sector regulators, viz., RBI, SEBI, IRDAI and PFRDA and the Technical Group on Financial Inclusion and Financial Literacy  unveiled  by the RBI with the strategic objectives of inculcating financial literacy concepts among various segments of the population. It aims at boosting the savings behaviour of the people which further helps in investment awareness and fulfillment of financial goals.

The terms financial education and financial literacy are not the same but are related concepts. Financial literacy is defined as a combination of financial, knowledge, skills, attitude and behaviour necessary to make sound financial decisions and ultimately achieved individual financial well-being.Financial literacy enables people to develop savings habit and those who save can have a steady income and expenditure flows.

They are more resilient to financial setbacks and achieve their financial goals. On the other hand, financial education is defined as the process by which financial consumers improve their understanding of financial products, concepts, and their risks and through information, instruction and 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.

Realizing this, the planners took adequate steps for dissemination of financial knowledge among the people of the country so that they can take prudent decisions in savings, credit  and investment matters.

The first National Strategy for Financial Education was launched in 2013 by NCFE and remarkable efforts were made by all the stake holders to boost the financial literacy in the country.

 The second NSFE was launched now after the Financial Literacy and Inclusion Survey made by the NCFE in 2018-19. The motive behind the conduct of these survey is to access the status of financial literacy also to evaluate the various programmes undertaken by the Government and financial regulators. The National Strategy for Financial Education was chalked out with the findings of the survey and its recommendations.

The major thrusts of the NSFE 20-25 are to inculcate financial literacy concepts through financial education; encourage savings behaviour and participation in financial markets; develop credit discipline; use digital financial services; manage risk with insurance cover; make proper planning for old age; gain knowledge about rights, duties and filing of grievances and research to evaluate progress of financial education.

To achieve the objectives, NCFE 20-25 chalked out a 5Cs approach - Content, Capacity, Community, Communication and Collaboration. Suitable content will be prepared to provide adequate knowledge to different categories of people which will help in the dissemination of financial knowledge in an easy and simple way.

 It is because the financial content is to be different for different categories of people like students, young and newly earning members, executives, for house wives, entrepreneurs, senior citizens, illiterates and workers from unorganised sector.

 If the content available is suitable to the persons, it can be grasped easily by them and enable them to become financially literates.

 Capacity building of the people involved in the process of financial education dissemination also given suitable priority by the NSFE 20-25. It also stressed on development of a suitable code of conduct for all those involved in the process so that effective implementation of the strategy can be done.

Another important approach identified by the NSFE 20-25 is the community-led efforts and approaches which can yield sustainable practices of financial education. It will have a long term impact and result in desired achievement of goals.

This is the era of communication and the NSFE 20-25 aims to use the latest communication technology to reach the masses.

Mass media channels, hoardings at public places and other techniques can take the financial education message to the nook and corner of the country. The ultimate aim of the NSFE is to reach the unreachable  so that they can actively use the financial products and participate in the financial markets.

The most important concept of the NSFE 20-25 is collaboration among the various stakeholders in the process of financial education. Different organisations are involved in the work without proper coordination which results in duplication of efforts.

The NSFE 20-25 aims at streamlining all the activities, bringing coordination among the participants, integrating the programmes of similar objectives and preparation of an information dashboard so that the progress can be gauged in a nutshell.

Inclusion of the financial education in the school curriculum, vocational courses, skill development programmes, entrepreneurial development programmes (EDPs) and in the teacher education programmes like BEd. and MEd will take the financial literacy concepts to every stage of people like children to the senior citizens.

In this background, the teachers of tomorrow have to play another role as a financial educator so that aim of achieving financial wellbeing of all is achieved.

(Dr Biswal is Head, Department of Commerce, Nowrangpur College, Nabarangpur. Mob: 9437125286. bhaskarnathbiswal@gmail.com)