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Stress on financial education

MUMBAI: The Reserve Bank of India on Thursday stated that financial education is considered an important element for promoting financial inclusion as also financial stability.

“In India the need for financial education is even greater considering the low levels of literacy and a large section of the population being still out of the formal financial set up,” the RBI stated in its Annual Report 2006-07, which released on Thursday.

Furthermore, economic and financial sector reforms have placed higher disposable incomes in the hands of the public. Availability of a variety of new financial products on both credit and investment sides which are provided by a host of financial intermediaries, has necessitated that the investing public understand the nuances of each product and product supplier and take an informed decision about investments.

“At the same time, those who are not a part of the formal financial system need to be educated about what banking is and why they should have relationship with banks so that they also participate in and benefit from the growth process,” the RBI added.

The Reserve Bank noted that world over central banks have undertaken various initiatives towards financial education.

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