How India’s Financial Literacy Effort Set a Guinness World Record
By Right About Money Staff Report
March 2, 2017
When India launched its Jan-Dhan financial inclusion program two years ago, the goal was to get every citizen a bank account even though just 30% were considered financially literate. Indian banks subsequently set a Guinness record by opening 18 million bank accounts in one week.
Some 270 million more accounts have been opened since then, and now the National Bank for Agriculture and Rural Development, part of India’s banking system, wants to begin measuring the impact on individuals’ financial well-being. Officials recently launched a survey of 40,0000 households across 29 states. The first results are expected later this year. Then, every three years researchers will return to the same households and track their progress.
The goal is to understand how access to modern banking including affordable credit and savings accounts improves household finances. The survey is part of an intensified effort to monitor the success of all financial literacy initiatives, so that government and banking authorities can make adjustments.
Financial literacy is on the radar in India like few other nations. The vast Indian population scores near the bottom of the pack in global assessments of money know-how. A Standard & Poor’s global survey found that 76% of Indian adults do not adequately understand key financial concepts.
Before the NABARD survey, officials had only dated census information to examine. “The census data comes with a lag and it only tracks the number of people who have bank accounts,” NABARD Chairman Harsh Kumar Bhanwala has said. “But this kind of survey will deduce if financial inclusion has helped create the credit history of an individual. The whole idea is to have more timely data on the impact of the steps being taken to promote financial inclusion.”
The survey will track savings, credit cards, insurance, pensions and mobile payments, and assess basic money understanding by age. It will gather household profiles that include the number of people, educational backgrounds and family assets and try to establish consumption and savings patterns.
The survey will also track ATM withdrawals and mobile banking and e-payment activity. Hopes are high that the new inclusion program coupled with this kind of monitoring will make a big difference down the road. The main reason for such hopes, says Y.P. Issar, former general manager with Punjab National Bank: “The survey will help policy makers undertake mid-course corrections.”