Youth must be equipped with financial planning skills: RBI DG Swaminathan
The idea of financial planning, budgeting, and saving needs to be instilled amongst the people, especially the youngsters, for ensuring financial discipline from an early age, according to Swaminathan J, Deputy Governor, Reserve Bank of India.
Swaminathan made this observation in the context of a business publication’s recent survey which revealed that 50 per cent of Indian shoppers are choosing to consume now rather than focus on long-term financial planning.
“Financial literacy calls for empowering people with the knowledge and understanding of various financial concepts so that they can make informed choices about their money and utilise financial services appropriately. Indeed, financial literacy is central to supporting the developmental objectives of inclusive growth.
“By addressing the demand side of financial inclusion, financial literacy enables people to understand the benefits of formal financial products and regulated financial providers as well as to make suitable choices across savings, credit, insurance, pension and remittances,” the Deputy Governor said in a speech at at a Conclave on Financial Literacy in Madurai earlier this month.
Swaminathan observed that as financial services are increasingly moving online, there is a risk of excluding those who lack access to digital technology or who are not familiar with how to use it. Bridging the digital divide is crucial for ensuring everyone can participate in the modern financial system, he added.
“By optimally using technology, we can unlock its transformative potential to advance financial inclusion. Recognising that many individuals lack access to traditional banking services but may have access to mobile phones or other digital devices, opens a window to explore innovative digital solutions.
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“To bridge the digital divide, we need to have tailored digital literacy programs that cater to the specific needs and capabilities of different demographic groups,” the Deputy Governor said.
These programs can provide hands-on training on how to use digital financial services, navigate online platforms, and protect against cyber risks, thereby empowering individuals to fully participate in the digital economy.
Emphasising that women play a crucial role in budgeting within households, as they often manage day-to-day finances, make purchasing decisions, and ensure the financial well-being of their families, Swaminathan said Financial Literacy Centres should ensure that there are programmes designed to cater to financial literacy needs of women.
“They (women) are adept at effectively allocating resources to meet the diverse needs of their families. They often negotiate better with vendors and service providers to optimise the family’s budget and maximise savings.
“…When women are educated and financially literate, they often serve as the primary educators within their families,” he said.
“Through targeted initiatives and partnerships, people from all walks of life can be equipped with the knowledge and tools they need to make informed financial decisions and achieve greater financial well-being,” Swaminathan added.