Financial inclusion and financial literacy should go hand in hand: RBI

James Crabtree, Chief Mumbai Correspondent, Financial Times, Uttam Nayak, Group Country Manager, South Asia, Visa Inc, Thomas Davenport, Director, South Asia, IFC, Ms. Nirupama Soundararajan, Additional Director, FICCI, Ms. Jayshree Vyas, Managing Director, SEWA Bank, distinguished guests, members of the press, ladies and gentlemen. It is my pleasure to be present here today to address this august gathering to deliberate on the challenge of financial education across emerging economies. Financial Literacy, together with Financial Inclusion and Consumer Protection form a triad which has a vital bearing on the stability of the financial system. Financial literacy is one of the major challenges facing countries across the globe, irrespective of their level of economic development and has been receiving significant attention from policy makers worldwide. I would, therefore, like to congratulate Financial Times and Visa for taking initiative by organizing this financial literacy forum and bringing together thinkers, policy makers and market practitioners to deliberate on how to enhance the effectiveness of our financial literacy efforts. When we talk about financial literacy, we are usually referring to a set of skills that allow people to manage their money wisely along with some understanding of essential financial concepts, not least an appreciation of the trade-off between risk and return. Financial Literacy is not just about markets and investing, but also savings, budgeting, financial planning, basics of banking and most importantly, about being "Financially Smart". To understand financial planning, a person should be financially literate and be able to understand the importance of preparing household budgets, cash-flow management and asset allocation to meet financial goals. Hence, the foundation of financial literacy needs to be laid by inculcating financial prudence through education at the school level.