GP Garg - 2014 Symposium on Financial Education in Korea

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NATIONAL CENTRE FOR FINANCIAL EDUCATIONIMPLEMENTING THE NATIONAL STRATEGY FOR FINANCIAL EDUCATION

GIRRAJ PRASAD GARG

REGISTRAR, NATIONAL INSTITUTE OF SECURITIES MARKETS

HEAD, NATIONAL CENTRE FOR FINANCIAL EDUCATION, INDIA

HIGH-LEVEL GLOBAL SYMPOSIUM ON FINANCIAL EDUCATION26-27 FEBRUARY 2014

SEOUL, KOREA

NATIONAL CENTRE FOR FINANCIAL EDUCATION (NCFE)

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IMPORTANCE OF FINANCIAL EDUCATION

NATIONAL CENTRE FOR FINANCIAL EDUCATION (NCFE)

Freedom from exploitative

financial schemes and moneylender

s

Confidence, knowledge &

skills to manage financial

products & services

Financial Inclusion and

Behavioral Change

Avoidance of over

indebtedness

Promotes entrepreneurship, saving

and investment

Reduces strain on

social programs and pension plans

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KEY COMPONENTS OF FINANCIAL EDUCATION

NATIONAL CENTRE FOR FINANCIAL EDUCATION (NCFE)

Understanding Basic Financial Concepts

Understanding the key

financial products needed

through one’s life

Making good financial choices

Developing skills, confidence and attitude towards financial risks and opportunitiesBetter Consumer Protection

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A GLOBAL EFFORT

NATIONAL CENTRE FOR FINANCIAL EDUCATION (NCFE)

According to the Organization for Economic Co-operation and

Development (OECD), National Strategy for Financial Education

promotes

A smoother and more sustainable co-operation between regulators and stakeholders

Avoids duplication of resources

Allows development of articulated and tailored roadmaps with measurable and realistic objectives based on dedicated national assessments

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CONCERNS

• Many financial institutions promoting financial education (FE) are predominantly making a product pitch

Current Practices

• No standardization of content. FE is being imparted in a variety of ways with no uniformity in the concepts being taught.

• Wholesome view needs to be taken with focus on the entire financial sector rather than small pockets.

Missing the big picture

• An emerging economy needs infrastructure to keep pace with growth. Indian households, with growing ambitions, also need a large corpus to meet their life stage goals. Both these require sustained long-term savings.

• Absence of a social security system and prevailing low insurance penetration, there is a need to promote long-term savings.

Need of long-term savings

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NSFE, INDIA

VISION: “Financially aware and empowered Indians accessing appropriate financial products and services through regulated

entities with necessary financial education and adequate grievance redressal mechanism.”

MISSION: “To undertake massive Financial Education campaign to help people manage money more effectively to achieve financial

well being by accessing appropriate financial products and services through regulated entities with fair and transparent machinery for

consumer protection and grievance redressal.”

GOALSCreate awareness and educate consumers on access to financial services, availability of various types of products and their featuresChange attitudes to translate knowledge into behaviourMake consumers understand their rights and responsibilities as clients of financial services

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IN INDIA To implement NSFE, a specialized institute, the National Centre for

Financial Education (NCFE) has been set up with the support of :

Reserve Bank of India Securities and Exchange Board of India Insurance and Regulatory Development Authority Pension Fund Regulatory Development Authority Forward Markets Commission Ministry of Finance, Government of India National Institute of Securities Markets (Implementing Body)

The Education boards are also part of the implementation process

Implementation under a technical group headed by Deputy Governor, Reserve Bank of India with representation from all the Financial Sector regulators, Government of India & Education boards. Presence of organizations of such significance shows the importance attached to financial education on the National Agenda

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APPROACH

Basic Financial Education (By NCFE)

1. Standardization of Content

2. Uniformity of the message

irrespective of the mode of

delivery

Sector-Specific Financial Education

(By respective Regulator)

1. Should be product-neutral2. Manufacturer-

neutral

Product-Specific

Financial EducationComplete

information to the customer by the

seller

For illiterates (Very Important

for any FE Program)1. Palatable

content2. Innovative

modes of delivery

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Other Ministries

FSDC

Sub-committee of FSDC

Technical Group for Financial Inclusion and Financial Literacy

Representatives from state education

departments

RBI

Basic (FE) for Adults

Sector Specific

Product Specific

IRDA PFRDASEBIMoF for facilitation / MHRD for implementation

Basic Financial Education (FE)through schools

NCFE/NISM

Maintenance of financial education website

Development of content

Research Data collection and monitoring of FE

PROPOSED STRUCTURE

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SNAPSHOT OF CURRENT ACTIVITIES UNDER NCFE NCFE – Financial

Literacy and Inclusion Survey

(NCFE-FLIS)

NCFE – Financial Education

Website (NCFE-FEW)

Financial Education

through school curriculum

NCFE – National Financial Literacy Assessment Test

(NCFE-NFLAT)

Assessment of needs through international experience

NATIONAL CENTRE FOR FINANCIAL EDUCATION (NCFE)

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ConceptInclusion in curriculum, is a long process, in the short-term students can be acquainted with the concepts of finance through this initiative. Target GroupSchool students of Classes VIII to X to assess their basic financial knowledge on topics like money, budgeting, banking, investment , insurance, retirement planning and so on. Highlights1. The test was conducted on 11th &

12th January, 2014. 2. 2000 schools & 1,00,000 students

registered3. The test would be made an annual

feature in the school calendars NATIONAL CENTRE FOR FINANCIAL EDUCATION (NCFE)

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NCFE- FINANCIAL EDUCATION WEBSITE

• Website Address: www.ncfeindia.org• Being developed to become a one-stop for all financial education

material.

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NCFE – FINANCIAL LITERACY AND INCLUSION SURVEY (NCFE-FLIS) Commenced a nationwide baseline survey for assessing the state of financial

inclusion and financial literacy.

Aid to assess as well as yield benchmarks of core financial literacy and

inclusion indicators at the various sub group levels and to measure its rate of

change on a continual basis to assess the efficacy of various financial

education interventions including those under NCFE.

Status: Survey report expected in August, 2014

FINANCIAL EDUCATION THROUGH SCHOOL CURRICULUM NSFE Document recognizes that students should be educated about financial

matters as early as possible in their lives. It is proposed to introduce it in an

integral manner in their school curriculum from Class VI to X.

Status: Discussions are underway

ASSESSMENT OF NEEDS THROUGH INTERNATIONAL EXPERIENCE

• Models developed by similar economies are under-study to avoid reinventing

the wheel.

ACTIVITIES UNDER NCFE

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CHALLENGES Multiple stakeholders are involved- reaching a consensus on the activities

Standardization of content across the board is critical.

Inclusion of the financial literacy material in the school curriculum is a long process. Negotiations with the education boards for the inclusion are on.

Making citizens realize importance of financial education.

India is a vast and diverse nation. Creating financial education (FE) campaigns customized for such an audience is an uphill task. Also, given the geography of the region, innovative modes of disseminating FE have to be devised

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ROAD AHEAD A comprehensive approach is being followed for the dissemination of

financial education

Joint efforts by the financial sector regulators and the Education Boards to make financial education part of school curriculum (e.g. inclusion in School Curriculum will have a snow-ball effect)

Three- tiered approach under NSFE (Basic, Sector-Specific and Product-Specific Financial Education) is being followed. Separate programs would be designed for the illiterates.

NCFE-NFLAT is proposed to be a compulsory annual test for the school students. Similar test is proposed for higher classes and college students

The Survey would be conducted every three years to understand the impact of the efforts under NCFE and to take policy decisions

Institutional Framework: The entire strategy is being implemented through existing institutional mechanism so avoid duplication of efforts.

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THANK YOU

NATIONAL CENTRE FOR FINANCIAL EDUCATION (NCFE)

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