Why is a developing nation like us not paying much attention to financial literacy when a large part of the workforce are middle-class taxpayers?

Himanshi Gupta, 22, who is pursuing her Masters from University of Delhi’s School of Open Learning, is probably more astute in financial matters than her peers.

From whatever amount she earns from her freelance assignments, she invests a part of it in mutual funds.

Himanshi is investing mostly in hybrid funds as she does not want a high exposure to risk.


“I am investing in these funds through mobile applications. Not only does investing in mutual funds give me a sense of financial security, but assures me that I am actively building my future,” she said.

Cynics may point out that it is an after-effect of the bombardment of the ‘mutual funds sahi hai’ campaign but she began way earlier than this.

She maintains that her learning about financial concepts in school has helped her become conscious about issues regarding her financial well-being.


Similarly, Gayathri, a student of MSc. in Hospitality in Bangalore, vividly remembers her Standard X farewell.


All her class friends were buying expensive dresses for the event, worth upwards of Rs 25,000, but she had different ideas.


Knowing very well that her expenditure should not exceed her pocket money income, she went ahead and bought a dress worth only Rs 1,000.


Just that year, she had learnt all about the basics of personal finance in her school, including concepts like what is income, expenditure, and savings.


Himanshi and Gayathri are just two examples of how an understanding of finance early on in life can help one stay financially independent.


This brings us to a worrying question – why is a developing nation like us not paying much attention to financial literacy? Is the education system to be blamed?


The reality of Financial Education in India


The National Strategy for Financial Education, released by the Reserve Bank of India in 2012, intended to formalise financial education at secondary and senior secondary school levels.


But seven years down the line, there are only a handful of schools where financial education is imparted.


The National Centre of Financial Education (NCFE), envisioned under the strategy, has been at looking after providing financial education to schools since its inception in 2013.


As of 2019, about 150 schools in India are certified ‘MoneySmart’ schools – the flagship school training program run by the NCFE.


Under the programme, schools are provided means for imparting financial education through free workbooks for students and training for teachers.


And not just NCFE, but even the National Stock Exchange (NSE) is playing its part in making sure our future generation is financially savvy.


“Financial literacy should begin at school stage. When children are aware of the concept, they can influence their families on the importance of savings and take necessary steps to better manage their money.  Thus, spreading the concept of financial literacy by inculcating banking habits and creating financial awareness among children is a great help,” said GC Sharma, Head, School and Universities, NSE.


Currently, NSE is offering financial education programmes in around 4,000 schools across six states, namely, Nagaland, Gujarat, Himachal Pradesh, Goa, Tamil Nadu, and Punjab.


Moreover, approximately 324 CBSE schools and 23,789 students are covered under the CBSE-NSE joint certification. NSE has also trained around 5000 teachers across different regions and states for financial skills in the last decade.


The Central Board of Secondary Education (CBSE), is trying to introduce financial literacy at school levels. It offers courses like Financial Markets Management, Banking and Insurance at Secondary and Senior Secondary level.


As Biswajit Saha, Director (Vocation and Training), CBSE puts it, “Financial skill is the 21st century life skill and needs to be imparted to different age groups, especially young minds.”


However, CBSE data suggests only 87 out of the 17,093 schools affiliated to CBSE are offering these courses.


So, where is the problem? 


Notably, the RBI, as part of its national strategy in 2012, had laid out a target of making 500 million Indians “financially literate” in the first five years. But all didn’t go as planned.


“Lack of funds has always been an issue with NCFE. An unrealistic target of reaching out to 500 million individuals cannot be met with an annual budget of Rs 5-6 crore,” an official from National Institute for Securities Markets said.


Lack of funds apart, no concerted effort was ever made to integrate financial education in the school curriculum as well.


“Our effort has always been to integrate financial education with the school curriculum. But, despite our best efforts, we have not been able to do so since the National Curriculum Framework (NCF) meeting conducted in CBSE every 10 years in order to revise the curriculum in schools has not taken place since 2005,” the NISM official further disclosed.


The way ahead


While Indian schools might be lagging behind in investing in financial education, Scandinavian nations have taken a head start.


Countries like Finland are of the view that education about financial concepts early on help improve the savings habits of individuals later on their lives.


A 2017 report titled “The Effects of Financial Education: Evidence from Finnish Lower Secondary Schools” had some interesting insights on how to incorporate financial education in daily lives.


The report mentioned that peer-to-peer learning can have enhanced outcomes when it comes to financial education.


This means that instead of a teacher telling the students the importance of savings, if they see a senior or someone their age teach them or demonstrate the same, they are more likely to follow suit.


It also stated that increased knowledge and enhanced savings behaviour are strongly correlated, supporting the notion that financial education is indeed the way to go ahead to bring about a changed financial behavior.


Geetha Lakshmi, Principal, Rani Public School in Kozhikode, Kerala reiterates the same. “Our ultimate aim is to send a child out of school after 14 years of schooling as a well-developed individual who knows to live his /her life in a safe and secure manner. Any profession, be it doctor engineer or entrepreneur, needs financial education to manage finances,” said Lakshmi who had incorporated financial education in her school long before any formal initiatives were made.


Where can you get financial education?


If you or your kid wants to enhance their learning about financial concepts then you can visit the websites of NCFE and RBI. RBI has a section on its website detailing many concepts related to personal finance, both simple and complex available in easy-to-understand ways, including comics and videos.


For those who want to go a step ahead, there are short-term online or offline course provided by the NSE or the BSE on a range of topics pertaining to wise money management.


Here are some of the courses:


Personal Finance Management (Basic) course – jointly offered and certified by Maharashtra Knowledge Corporation Limited and National Stock Exchange.


FACT (Financial Awareness and Consumer Training) for young graduates and post-graduates.

Money Smart School Programme for school students of Standard VI to X.



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