RBI releases ‘National Strategy for Financial Education 2020-2025’ (NSFE)

The Reserve Bank of India (RBI) today (on Thursday) came out with a ‘5-Core Actions’ approach for promoting financial education, which among other things include development of relevant content for school children and adults, community participation and collaboration among various stakeholders. According to NSFE, the country has been one of the important developmental agendas of both the Government of India and the four financial sector regulators to strengthening the financial inclusion in the country. “Financial literacy supports the pursuit of financial inclusion by empowering the customers to make informed choices leading to their financial well-being,” it said.

Financial literacy is 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. From the time launching of the first NSFE in 2013, various stakeholders have undertaken several measures to improve the financial literacy of the cross-section of the population in the country, the document said. Now after 5 years, , the National Centre for Financial Education (NCFE) has reviewed and prepared the revised NSFE (2020-2025) in consultation with four regulators  (RBI, SEBI, IRDAI and PFRDA) and other relevant stakeholders, the document said.

The Strategy recommends adoption of a Multi-Stakeholder Approach to achieve financial well-being of all Indians. “Update content of financial education in school curriculum for students of classes VI to X”, said action plan for NSFE (2020-25).To achieve the vision of creating a financially aware and empowered India, NSFE has laid down strategic objectives, like inculcate financial literacy concepts among the various sections of the population through financial education to make it an important life skill, and encourage active savings behaviour. Among the other strategic objectives are encouraging participation in financial markets to meet financial goals and objectives, developing credit discipline and encourage availing credit from formal financial institutions as per requirement, and improving usage of digital financial services in a safe and secure manner. The document stresses to develop credit discipline and encourage availing credit from formal financial institutions as per requirement and also Improve usage of digital financial services in a safe and secure manner to achieve the objectives.

Managing risk at various life stages through relevant and suitable insurance cover and plan for old age and retirement through coverage of suitable pension products are the other key objectives laid down in the document. The document stresses on development of financial literacy content for school children (including curriculum and co-scholastic), teachers, young adults, women, new entrants at workplace/entrepreneurs (MSMEs), senior citizens, persons with disabilities, illiterate people. It also makes a case for integrating financial education in courses like B.Ed./M.Ed. besides other teachers’ training courses to create a cadre of financially educatd teaching professionals. It also calls for development of a financial literacy mobile app, and leverage social media. NSFE further said the Technical Group on Financial Inclusion and Financial Literacy (TGFIFL) would be responsible for periodic monitoring and implementation of National Strategy for Financial Education. There would also be periodic monitoring of the activities undertaken by various stakeholders for dissemination of basic, sector-specific, and process literacy.