Financial Inclusion, Financial Literacy and Financial Education in India

TOPIC- Financial Inclusion, Financial Literacy and Financial Education.

First Conclusion: 
Financial inclusion can significantly reduce poverty and boost should prosperity but efforts must be well defined.

Numerous barriers to financial inclusion on the supply and demand side.

A national strategy with a range of policies can increases access:

• Financial Institution- NFI'S, Credit-cooperation, State Bank and Post Offices.
• Innovative financial product and services.
• Innovative delivery technologies- Mobile phone Banking, E-money. 
• Innovative ways to increase credit access. 
• Needs to include all major stakeholders.

Financial access needs to promote in a way that is aligned with the economic returns with consistent regulations.

Micro Finance Entities should be regulated "proportionately" in line with financial system risk. Need to coordinate consumer protection, regulation & financial education. 

Second Conclusion:

Theoretically, increased financial inclusion could have both positive and negative implications for financial stability.

• Positive- Diversification of bank assets 
• Negative- Erosion of credit standards, banking crises

we find evidence that an increased share of lending to MSME'S aids measures of financial stability, mainly reducing the share of NPLs and lowering the probability of default by financial institutions.

Financial education important, but programs lagging in India

• Financial literacy scores generally low
• More efforts at financial literacy measurement needed 
• The board-based program needed to promote financial education: Various target groups, including students, excluded groups, MSMEs.

Third conclusion:

The overall scores of financial literacy in India are at the low end of the range seen in the other 30 countries (relatively low levels of per capita income), but more than consistent with income levels. 

Higher levels of education are highly significant and positively correlated with financial literacy of India and other countries.

Both financial literacy and general education levels are positively and significantly related to savings activity and financial literacy has an independent effect - FINANCIAL EDUCATION POLICY CAN POTENTIALLY RAISE THE SAVINGS RATE.

Both financial literacy and general education levels are positively and significantly related to the measure of financial inclusion - FINANCIAL EDUCATION POLICY CAN POTENTIALLY INCREASE FINANCIAL INCLUSION.