RBI bats for increasing financial literacy

The Reserve Bank of India (RBI) feels a lot of work is needed to be done on financial literacy in the country.

“While a number of measures have and are being taken across the country, given the enormity of the task, a lot of ground still needs to be covered,” said K C Chakrabarty, deputy governor of RBI, while addressing the workshop on financial literacy at Nabard in Mumbai.

He listed out several things done by RBI and other stakeholders to spread financial literacy. Chakrabarty said top executives of RBI visited remote villages in the country to understand the ground level position, spread awareness about benefits of being connected to the formal financial system and disseminate information about the functioning of the central bank.

The RBI website has a separate link that provides financial literacy material. Apart from RBI, commercial banks have opened financial literacy centres (FLCs), the deputy governor said. There were 575 FLCs in the country as of September-end.

Apart from general public at large, Chakrabarty emphasised on financial literacy for other stakeholders, too.

“I would like to emphasise that even banks, financial institutions and other market players need to be financially literate and be fully aware of the risk and return framework”

He quoted an example of gold where even basic concepts are not fully appreciated by seemingly literate groups, resulting in assumption of excessive risks. The steep rise in gold prices over the past few years only indicates the risk involved in investment in gold has heightened, a fact which is not recognised by people, he added.

RBI will organise a regional conference on financial education in Delhi next month along with the World Bank and the Organisation for Economic Cooperation and Development, Chakrabarty said.