How a Unified Approach is Improving Financial Literacy in India
By Jeanne Doran
June 23, 2017
Like many developing countries, India lags badly in financial literacy. Three quarters of adults in India do not understand basic money concepts—an especially brutal statistic given that the country is home to 17.5% of the world’s population.
But the tide may be reversing. Digital initiatives such as videos, short films and interactive quizzes are proving more effective than previous campaigns in traditional media. The new tech-driven programs have national backing and are being pushed out in all corners of the nation.
It began five years ago with a formal national strategy for financial education similar to those put in place at a few dozen nations since the financial crisis. Crafting the strategy were India’s highest regulatory authorities: The Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority and Pension Fund Regulatory and Development Authority.
The goal was to bring India’s disparate financial literacy efforts under one umbrella. In doing so, it coordinated the collective initiatives of banks, stock exchanges, brokerages, mutual fund and insurance companies—as well as government agencies. This established financial education as a national priority.
But initial public service and other campaigns in traditional media fell short of goals. Two years ago, India Prime Minister Narendra Modi launched Digital India, a massive campaign to connect rural areas of the country with high-speed Internet. This paved the way for digital platforms to spread financial services—and financial education—more broadly.
One sign of success: 280 million new bank accounts have been opened in India in just the past few years. In one record-setting week, 18 million new accounts were opened.
Today the nation’s Unified Payments Interface, a payment system, enables digital wallets and allows consumers to easily transfer money on a mobile device. This has pushed India towards a cashless economy while grabbing the attention of many millions of mobile users who want to learn more.
The number of digital transactions in India has grown to an estimated 692 million this year, from 419 million in 2015. This is still relatively modest. In Nigeria, for example, digital transactions total nearly 1 billion a year. But it is a start.
India is the world’s second biggest smart phone market with more than 220 million users. There are 350 mobile Internet users in the country, and that number is expected to increase by 50 million every year for the next three years. This should help the financial literacy push as the national strategy calls for informational campaigns designed for the Internet and mobile devices.