Money & Banking

Strategy for financial education recommends adoption of 5C approach

Our Bureau Mumbai | Updated on August 20, 2020

Prescribes the content, capacity, community, communication and collaboration approach to the financial well-being of Indians

The revised National Strategy for Financial Education (NSFE: 2020-25) has recommended adoption of a ‘5 C’ – Content, Capacity, Community, Communication and Collaboration – approach to achieve the financial well-being of all Indians.

The NSFE has been put together by the National Centre for Financial Education (NCFE) in consultation with the four financial sector regulators (Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and Pension Fund Regulatory and Development Authority) and other relevant stakeholders.

The NSFE: 2020-25 has been released in the backdrop of a paradigm shift in digital transactions and payment infrastructure in the country (Goal of Less Cash Economy) and subsequent to completion of the period of the first NSFE: 2013-2018.

The revised NSFE has suggested financial literacy content for school children (including curriculum and co-scholastic), teachers, young adults, women, new entrants at workplace/ entrepreneurs (MSMEs), senior citizens, persons with disabilities, illiterate people, etc.

It has recommended capacity development of various intermediaries, who can be involved in providing financial literacy, and development of a ‘Code of Conduct’ for financial education providers.

The NSFE advised that community-led approaches should be evolved for disseminating financial literacy in a sustainable manner.

As part of the communication approach, use of technology, mass media channels and innovative ways of communication for dissemination of financial education messages has been suggested.

Further, a specific period in the year needs to be identified to disseminate financial literacy messages on a large/ focused scale. Public places with greater visibility (e.g. bus stands, railway atations) can be leveraged for meaningful dissemination of financial literacy messages.

When it comes to collaboration, the NSFE document recommended integrating financial education content in the school curriculum, various professional and vocational courses (undertaken by the Ministry of Skill Development and Entrepreneurship) through their Sector Skilling Missions and B.Ed./M.Ed. programmes.

Further, financial education dissemination should be integrated as part of on-going programmes. The document also pitched for preparation of an Information Dashboard.

The strategy also suggested adoption of a robust ‘Monitoring and Evaluation Framework’ to assess progress made under the strategy.

Referring to the rapid progress towards digitalisation over the last few years, the revised NSFE said it has become imperative to revise the existing NSFE and to adopt innovative measures to implement the same.

“It is envisaged that implementing the strategy would go a long way in furthering financial literacy across the country and result in positive behavioural outcomes among the population emanating from the strategic objectives laid down in the document,” the NSFE said.

NSFE strategic objectives

Through the 5C approach, the NSFE seeks to inculcate financial literacy concepts among various sections of the population through financial education, to make it an important life skill.

The NSFE aims at encouraging active savings behaviour and participation in financial markets to meet financial goals and objectives.

The strategy seeks to develop credit discipline and encourage availing of credit from formal financial institutions as per requirement. It wants to improve usage of digital financial services in a safe and secure manner.

The document wants management of risk at various life stages through relevant and suitable insurance cover and plan for old age and retirement through coverage of suitable pension products.

It also seeks dissemination of knowledge about rights, duties and avenues for grievance redressal.

Published on August 20, 2020

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