RBI Survey says the country is low in Financial literacy. Know more!

The banking sector is advancing with new end technologies. However, a survey by RBI says that the country’s financial literacy is low, in both urban and rural areas. Let us know more here.
Financial literacy in India
Financial literacy in India

Most of the rural population in India, most of the rural population is neither tech-savvy nor aware of the digital banking system in India. Recently, the “Financial Literacy and Inclusion survey” held by the Reserve Bank of India (RBI) revealed that digital banking awareness is at the same level among urban and rural populations all over the country. The average for both segments is found to be 11.7 on a scale of 21.

 

What is meant by Financial literacy?

 

Understanding the use of various financial skills, like investing, personal financial management, budgeting, and more is called financial literacy.



What were the criteria to gauge the financial literacy of the country?

The criteria used to estimate the financial literacy of India in the survey by RBI were financial knowledge, attitude, and behavior. 

 

The average rural and urban scores were 11.7 on a scale of 1 to 21. This shows that both rural and urban areas, despite educational and informational disparities, share almost the same level of financial literacy.

 

The average scores, zone-wise!

 

Both rural and urban areas share the same score, 11.5 in the north zone. 

For the east zone, the scores were 12.1 for both urban and rural areas.

For the middle zone, there was a slight disparity between the scores of rural and urban areas. The rural areas had a score of 12.1, while the urban areas received a slightly higher score, viz., 12.5.

Talking about the west zone, the scores were almost identical. The rural areas received a score of 12.5, while the urban regions received a score of 12.6.

In the south zone too, there was a very slight difference between the scores. For the rural areas, the score was 10.3, while for the urban regions, the score was 11.2.

 

What do the scores suggest?

 

As per the RBI, there is very little variation between the scores of rural and urban regions of the country. This implies that a lot of work is required to enhance the understanding of digital banking across all social strata of the country.



Why is Financial Literacy important?

 

Financial literacy is an essential aspect of one’s life. It sets a relationship between the individual and money. Merely earning money is not enough; understanding how money works, and how one can grow money through various lawful means is a crucial skill. The earlier one begins to build good relations with finances, the better the chances of success and quality of life.

FAQ

What is meant by Financial Literacy?

Understanding the use of various financial skills, like investing, personal financial management, budgeting, and more is called financial literacy.
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