6

Sa-Dhan Patrika

Volume 7,

Issue 2, December 2006

embraced since the early

vulnerable consumers from

nineties, and the ensuing

falling prey to `financially

debates, it is imperative that the

disquieting

credit

society and general populace

arrangements'.

be objectively informed about

Even in regard to remittance facilities and

the fundamental economic

foreign exchange encashment, the lack

issues and the rationale for, at-

of awareness about the various facilities

times difficult, choices to be

could adversely impact a population

made in this regard. This could

segment at the `bottom of the pyramid'

go a long way in creating an

which is the beneficiary of smaller

informed and harmonious

remittances from migrant workers.

democracy.

Recently, a Working Group on Cost of NRI

Remittances has stressed in its report the

Conclusion

need for an ongoing `awareness

There is a need for banks and other

program' for imparting basic awareness

agencies striving to extend financial

on  facilities  existing  for  making

education to the masses to appreciate

remittances, particularly for migrant

that financial inclusion is a continuous

workers. Apart from other things, this

process. Efforts to extend literacy to make

As part of

could also help in reducing the cost of

the common man enabled by being

consumer

effecting remittances.

aware of the evolving functional, legal

awareness, many

Though the term `financial

and technical issues cannot be a one-

initiatives have

education has come to be

time effort.

been taken to

associated with individual/

increase the

A common effort of the educational

personal  finance,  a  very

disclosure levels

programmes typically focusses on the

important segment that must be

on part of lenders,

`supply' side that stresses on attracting

brought under the ambit of such

customers in the financial fold. However,

but effectiveness

i n i t i a t i v e s relates to small

what is needed is to have is an `auto pilot'

of all this would be

entrepreneurs  and  small

concept,  where  the  prospective

predicated on the

businesses. Particularly when the

customer is empowered to make /

effort is towards `inclusive

financial

demand the desired services. This could

growth', it is these segments in

understanding of

create a qualitative `demand' situation

smaller cities and towns that

the person taking

of the financial services.

could really showcase the

the loan

benefits of economic growth.

The objective of financial education is

The focus in such cases, would

also customer protection. It helps

obviously be different, with

customers to better understand and

greater stress on awareness and

manage financial risk and deal with

timeliness of financial advice,

complexities of the market place place

instead of just education. Such

and take advantage of increased

timely advice could be the

competition and choice in the financial

deciding factor in the success or

sector. The RBI, on its part, intends to

failure of their ventures. In all

advance the cause of financial

probability, the promoters of

education in the country as part of an

these small ventures would be

overall strategy. Currently, a process of

educated and already have a

credit counseling is being encouraged to

business sense and a business

help all borrowers, particularly those in

idea  that  needs  to  be

distress, to overcome current financial

actualized. It is here that

problems and gain access to the

awareness about new financial

structured financial system.

products and an understanding

of their pricing could enable

However, in the ultimate analysis financial

them to ensure that they

education is only one pillar of an

understand the downsides of

adequate financial policy to improve

the product, present and future,

financial literacy and expand access to

and be in a better bargaining

financial services. It can complement,

position vis-à-vis the lender.

but not replace other pillars such as

greater transparency, policies on

Finally, the concept of financial

consumer protection and regulation of

education could ideally be

financial institutions. I do hope that in our

stretched to cover economic

collective interest the issues raised in this

education as well. At a broader

Conference are operationalised and

societal level, given the path of

translated into grass root level initiatives.

economic reforms India has

(Special Address by Ms. Shyamala Gopinath (Dy. Governor, Reserve Bank of India)

at BANCON- 2006, Hyderabad on November 4, 2006)

Source : http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=313