Financial Literacy
In India, since the country’s inception, financial literacy played an important role towards contributing to overall growth and development of the economy. However, approximately 76% of the Indian population is still financially illiterate, among which people aged 35 and above have a better level of financial knowledge as compared to others; which itself is a worrying factor (Standard & Poors Financial Services LLC). Thus, it is obvious why such an emphasis is being made to increase the level of financial inclusion in India. For a developing nation, the people play an important factor in contributing to the economic growth, but if these people don’t possess the skills and knowledge to use the latest technology then it lessens the growth substantially.
This has led to the requirement of further reforms in the financial sector, which should begin by providing a crisp and clear definition of financial inclusion like “Expanding access to financial services such as payment services, savings products, insurance products and inflation-protected pensions” (CRISIL, June 2015). Another description of financial inclusion, which further elaborates on the above, is given by a committee headed by Dr C Rangarajan in 2008 as: “The process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost” (CRISIL, June 2015).
Apart from banks, organizations like Micro-Finance Institutions (MFI) and Self-Help Groups (SHGs) play an important role in providing necessary funds at a reasonable rate. MFI have wide existence in the semi-urban and rural sector, and have been tasked with the objective to provide finance to the under-privileged and improve the literacy conditions in rural areas. Moreover, due to the existence of third-party lenders which provide loans at exorbitant rates the SHGs came into being, which is initiative by the rural people