Context:Recently, the Reserve Bank of India released a national strategy for financial education to be implemented in the next five years.
About the Strategy

• The NSFE for the period 2020-2025, the second one after the 2013-18 NSFE, has been prepared by the National Centre for Financial Education (NCFE) in consultation with all the Financial Sector Regulators (RBI, SEBI, IRDAI and PFRDA.
• Other stakeholders include (DFIs, SROs, IBA, and NPCI) under the aegis of the Technical Group on Financial Inclusion and Financial Literacy (TGFIFL) under the Chairmanship of Deputy Governor, RBI.

 Key recommendations

• The strategy recommends the adoption of a multi-stakeholder approach to achieve financial well-being of Indians.

The document has recommended a ‘5 C’ approach for dissemination of financial education in the country. These include an emphasis on:

• Content: Financial Literacy content for various sections of population.
• Capacity: Develop the capacity and ‘Code of Conduct’ for financial education providers.
• Community: Evolve community led approaches for disseminating financial literacy in a sustainable manner.
• Communication: Use technology, media and innovative ways of communication for dissemination of financial education messages.
• Collaboration: Streamline efforts of other stakeholders for financial literacy.

 Other objectives

• The strategic objective is also towards improving usage of digital financial services in a safe and secure manner; as well as bringing awareness about rights, duties and avenues for grievance redressal.
• To achieve the vision of creating a financially aware and empowered India, certain strategic objectives have been laid down including:
• Inculcating financial literacy concepts among various sections of the population through financial education to make it an important life skill

Encouraging active savings behaviour and developing credit discipline.

Additional Information
Financial literacy

• According to the Organization for Economic Co-operation & Development (OECD), it is defined as a combination of financial awareness, knowledge, skills, attitude, and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well-being.

Financial Education

• It is defined as the process by which financial consumers/investors improve their understanding of financial products, concepts and risks and through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help and to take other effective actions to improve their financial well-being.