4

Sa-Dhan Patrika

Volume 7,

Issue 2, December 2006

other household members, and

of basic knowledge and lack of

financial institutions

awareness of the products and services

available from the banks. It is important

Use of Bank Services: How banks

to note that the Financial Inclusion Task

work and impose charges; How

Force of the United Kingdom, one of the

clients can maximize bank

pioneers to talk of financial inclusion, has

services, interact with banks,

identified `access to free face-to-face

and effectively use ATMs

money advice' as an important

component of financial inclusion, apart

An analysis of such programs in the OECD

from `access to banking' and `access to

countries reveals that many educational

affordable  credit'.  People  need

programmes are integrated into the

information and advice when they either

provision of specific financial services,

save their money or get into debt. Such

such as first or basic bank accounts,

information and guidance can best be

checking and savings accounts and

delivered by appropriate mechanisms

matched-savings plans while others

and if such effective mechanisms are put

adopt a broad stand-alone approach,

in place through the banks, they in turn

teaching budgeting, savings and credit

would reinforce the demand for financial

management, etc., with no connection

services.

to any product of service. Aims tend to

vary according to the majority target

Another impediment is the difficulty or the

population.

lack of ease of addressing issues that

affect  a  common  man.  Despite

For

the generic unbanked, aims

concerted efforts, the current state of

are to explain the benefits and

transparency coupled with the difficulty

use of bank account ownership

of  consumers  in  identifying  and

and services or to build up

understanding fine print information leads

fundamental financial literacy

to an information asymmetry between

skills.

the financial intermediary and the

customer. It is important to understand

For

low/moderate-income

that the lack of such awareness in itself

underserved consumers, most

amounts to risk; and the challenge is to

programmes offer advice on

make customers aware of the various risk.

general money and credit

In terms of promoting financial inclusion,

management; whereas others

much of the work is simply in providing

have a specific goal or are

easily understood information in a safe

embedded in schemes to

and engaging environment.

encourage savings, asset-

building and homeownership.

...Scope for financial education

These initiatives aim to build economic

Undoubtedly, there is a role for promoting

empowerment and increase long-term

financial education in the context of

self-sufficiency in order to revitalize and

development policies and programs to

stabilize disadvantaged communities.

reduce vulnerability and expand

opportunities for the poor. To this end,

Indian context

there is a need to explore the potential

Financial education has an ever more

for integrating financial literacy into

critical role to play in the changed

various types of development programs:

financial landscape of the country which,

microfinance, vocational education, skills

while on one hand has presented with

training, business development, health,

newer opportunities for future collective

nutrition, agriculture, and food security

growth, on the other, it has also

Despite concerted

programs. In the late 1990s a move in the

heightened fears of uncertainty in certain

UK and US to have all Government

efforts, the current

quarters mainly because of increasing

payments

made

electronically

state of

multi-faceted choices and options in the

contributed  to  heightening  the

transparency

management of personal finances and

importance of financial exclusion as a

coupled with the

exposure to a gamut of risks. The issue of

policy concern. Electronic government

difficulty of

inclusive growth has been given top

payments have made having a bank

consumers in

priority and in this direction, the banking

account essential in order to receive

identifying and

sector is expected to play its part. The

payments and benefits. This has made it

understanding fine

initiatives on financial inclusion so far,

all the more important for unbanked

print information

have been a small step in this direction.

consumers to access information on

leads to an

Financial education could ideally

basic bank accounts savings accounts

information

supplement these initiatives for long term

and other financial services. Financial

efficacy.

asymmetry

education programs would be required

to access information on financial

between the

...Some issues

services.

financial

intermediary and

One of the major hindrances in the way

In India too, improved technology will

the customer

of delivery of financial services is the lack

enable, for example, Governments to