Are You Financially Literate?
- Part 1 -

G S Oinam *

This question was asked for the first time in India by a lady economic professor of Oxford University. About 35 % of Europe is financially literate according to oxford university survey. However, she did not define her definition of financial literacy and she was emphasized on higher level of teaching like investment pattern, banking, income and expenditure method etc, etc.

Can it applicable in rural and urban poor of India was my question. Hopefully, my definition is very simple and it can be applicable in rural and urban poor of India. "How to earn one Rupee and where to spend it through safety nest (modern banking)". Level of financial literacy may be differ and it can be promoted like class 1, II, matriculate, undergraduate, graduate etc. Skill development, financial management like income - expenditure, profit and lost, budgeting and modern banking system and its usefulness etc are an important part of financial literacy.

Method of teaching must be very simple and attractive like A for Apple. An Apple is sweet to eat. Apples are abundantly grown in the states of Himachal Pradesh and Jammu and Kashmir of India. Our common people do not know your economic theory and thought, management terminology, banking rules etc. In developed countries, expert comments are serious. Even a child will ask 'whether the tooth brush was approved by Dental Council?'

In India, a salesman of medical store will solve all your problem of illness. Everybody knew that doctor's prescription is mandatory and very important. However, poor people often ignored it and sales man can not deny customer request unless it was a serious case.

Looking at the problems and prospects of urban and rural poor, "School of Productivity" a new idea was created to fight our three great challenges like health, ignorance and poverty within a single system. In which financial literacy, social literacy and information technology (ICT) are some part of it. Despite of various efforts made by Prime Minister Dr. Manmohan Singh, distribution system of these three great challenges are part and partial in Manipur. Political will of state government is lagging behind.

Recently, some banking sector has introduced financial literacy programme in Manipur. I was happy to learn it even I don't know what exactly they had taught; perhaps, an awareness campaign mostly to impart information of banking and drive to open bank account to the people. Banking system in Manipur is very poor. Recently SPF government of Manipur enforced law of compulsory withdrawal of government staffs salary through bank account. It is a significant improvement of banking in Manipur.

In the same manner, a team of officials from the Reserve bank of India (RBI) outreach programme to impart information on banking mostly fake currency notes at Arua village of Faridabad (Hariyana) just 2 hours journey from Delhi.

Arua village has no banking facility and power supply is intermitted. Nearest bank is 7-8 km away. RBI's outreach programme aims to inculcate financial literacy among the rural residents and gradually include areas which have no banks into the financial system. RBI's financial literacy programme was heavily criticized in Times of India, New Delhi publication.

RBI says it will maintain a long term relationship with villagers like Arua that it visits for its outreach programme. RBI hand over computers to three schools however the school like the rest of village, have intermitted power supply. RBI would see if solar power cells could be installed. However, villagers are unsatisfied telling "you are telling us all to open bank account, but there are no jobs and no money in the village. What should we put in the bank?

Skill development and financial management must go together with for imparting information of banking facilities. Even there, the banks demand that mortgage my entire land holding even for a small loan. In addition, they want a guarantor. Who will take such a risk when they faced a drought for six months, followed by floods for six months? In the absence of formal credit, farmers rely on richer persons with upwards of 5-10% per month with a mortgage of movable or immovable property. Arua village cases are same as happening in Manipur. I have visited some villages of Faridabad.

In case, RBI would like to continue financial literacy programme then it will be best way to impart training for stock share market to the educated unemployed youths. I saw some successful student and job seekers involved in stock share market. This training will be helpful to some of the educated unemployed persons temporarily or permanently. Method is very simple open PAN card which is necessary for opening D- MAT account. Internet access Bank account for transaction, Market news, market analysis of trading company, buying and selling of share stake, stop loss point etc. if provided training by a professional then bank can sanction small amount of loan to them. Otherwise, impart financial literacy programme jointly with NGOs in rural area.

Financial literacy is necessary in our life. Effort of our earning will be fruitless unless we do not utilize our earn money in a proper way. We may earn crore of rupees but the money will go wasted unless we are financially literate. Life will be miserable day by day. We can maintain quality of life only after we have the knowledge of financial literacy in which expenditure pattern has to be check with compare to income and family budgeting is one part of it, skill development is the back bond to control all and above.

According to a recent world bank report, more than 87% of India's poor can not access credit from a formal sources and have to depend on moneylender who charge them interest rates varying from 48%-120% per annum. As per RBI estimate, only 31 percent of India's population has access banking services. The bank has lowest penetration in Bihar, Jarkhand, Orissa, Chattishgarh, Madhya Pradesh and North east states.

For instance, there are about 86 lakh bank accounts in Hariyana in a population of 2.10 crore, 1.49 crore accounts in Punjab with a population of 2.42 crore. But Chandigarh has the highest penetration on 12 lakh accounts for a population of 9 lakh populations. Manipur has about 2 lakh bank accounts out of 25 lakhs population. In the UK; 92-94% of the population has either current or saving account.

Social expenditure pattern in Manipur:

Whenever we asked about an income of a gentleman, the answer was not exact. However, expenditure of the gentleman will be double of his open income by uncertainties like marriage, ceremonies reception, health problems, invitation of friends and relatives and any others. Therefore, many of the gentlemen go to credit.

Marriage is uncertainty in most of the families in Manipur. Love marriages are common. Many couples could not enjoy happy married life due to burden of budget deficit. Engage marriage after love affairs has been practicing in some families. This is a social development (changes) enable to prevent from unwanted and unseen big budget deficit.

Ceremonial Invitation: September to March is ceremonial season in Manipur. In this period, a well known family may receive 3 to 4 invitations per day. Minimum expenditure to attain an invitation is Rs.500 without convience. How much money have you spent on ceremonies in a month / year, you imagine? Expenditure may be less if women and children attained the invitation. These expenditure are uncertainty and sudden. In the case of saradha ceremony, your absence means your relationship with him was finished.

Whenever your heard the news of sickness of your near and dear one, one has to visit to enquire about the condition of the patient even patient was hospitalized, breaking the rules of hospital. Are you a doctor? Can you help anything to the patient? This is a big fashion. It was good and true in the days of under privilege socio and economic condition. Men are in groups. Men can not live alone. One has to help another when he was in need. It is a humanitarian aid by labour, advice or money to support my near and dear one when he was in trouble. The system was really beautiful.

However, we have broken the system and now; it is changing to a big fashion of give and take method. Day by day, expenditure of ceremonies is increasing in competition. Rich people spend more and you follow up to make it equal. Other than, if you have no money than you can not die!

All are ridicules. Let the capable rich men do it. It is the right time to show his style of pride. Why are your following up to make it equal? Do not greed and do not shy away that you can not do as he did. Imitation is good if you have experience and understanding and deep in knowledge about it; otherwise, it is called monkey style. Limit your ceremonial invitation. Your invitation may disturb to somebody and do not think your relationship with him was finished when you received no invitation.

Who will initiate? Any body can initiate it. You can do; I can do it. If any of the rich and role model does initiate it then media can spread the news as a promotional campaign.

To be continued....