What is the National Strategy for Financial Education (NSFE) released by RBI?
The Reserve Bank of India (RBI) has released the National Strategy for Financial Education (NSFE) for the next five years (2020-2025). Under this, the central bank has recommended a '5-Core Actions' approach for dissemination of financial education in the country. The first such strategy for implementation was released in the year 2013.
On June 18, 2020, as per RBI, the strategy has been approved by the FSDC-SC in its 24th meeting. However, the document was made public on August 20, 2020.
In 2008, the Raghuram Rajan Committee first mooted the FSDC. In the year 2010, the then Finance Minister Pranab Mukherjee set up an autonomous body to deal with Macroprudential and financial regularities.
Who has prepared the strategy?
The strategy has been prepared by the National Centre for Financial Education (NCFE) in consultation with all the Financial Sector Regulators (RBI, SEBI, IRDAI and PFRDA), DFS and other Ministries of Government of India and other stakeholders (DFIs, SROs, IBA, NPCI) under the aegis of the Technical Group on Financial Inclusion and Financial Literacy (TGFIFL) under the Chairmanship of Deputy Governor of RBI, M.K. Jain.
It must be noted that NCFE is a registered Company under Section 8 of the Companies Act of 2013 (Not For Profit). The company is promoted by RBI, SEBI, IRDAI and PFRDA.
What are the 5-Core Actions?
The 5-Core Actions are as follows:
1- Content for financial education to all the Indians (including curriculum in schools, colleges and training establishments).
2- Developing Capacity and Code of Conduct for the providers of financial education.
3- Community to disseminate financial literacy in a sustainable manner.
4- Communication for using technology, media and innovative ways of communication for dissemination of financial education messages.
5- Enhancing Collaboration to streamline the efforts of various stakeholders for financial education.
Objectives of NSFE
1- The strategy aims to create a financially aware and empowered India. This includes financial education to all Indians, enabling them to understand the role of money in their life.
2- The mission also envisages to conduct financial education campaigns pan India for all the sections of the society to help people manage their money more effectively and to achieve financial well being by accessing appropriate financial products and services offered by regulated entities having a fair and transparent mechanism for consumer protection and grievance redressal.
3- The mission also aims to improve the research and evaluation methods to assess progress in financial education.
4- It also aims at improving digital financial services in a safe and secure manner.
5- The strategy also aims to cover suitable pension plans for retirement.
Who will be monitoring the progress of the strategy?
The Technical Group on Financial Inclusion and Financial Literacy (TGFIFL) will implement NSFE and monitor the progress made under the Financial Stability and Development Council (FSDC).
What is meant by Financial Literacy?
As per OECD, financial literacy is a combination of financial awareness, knowledge, skills, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well being. People achieve
financial literacy through a process of financial education.
What is meant by Financial Education?
The process by which financial consumers/investors improve their understanding of financial products, concepts and risks and, through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being.