Department of Business Administration
Outreach Programme of the Department
Financial Literacy (FL) is the ability to use knowledge and skills to manage financial resources to attain well being for lifetime. It addresses the issue of financial capability to make sound financial decisions .According to OECD (2005) financial education programme aimed to improve FL enable individuals to improve understanding of financial products, concepts and risks. There is increasing evidence that consumers lack financial skills. A study revealed that less than 10% of US households were able to answer questions related to compound interest, inflation and diversification.
The role of financial literacy has received attention in both developed and developing. In US, in June 2008, president's advisory council was set up to promote financial literacy. In India also RBI has launched an initiative in 2007 to establish financial literacy and credit counseling centers across the country that provide gratis financial education and counseling to urban and rural population. Recently finance Minster has stressed that FL is a must for financial inclusion and advocated its inclusion at the school level. The CBSE board is planning to incorporate FL in its curriculum.
The initiative for promoting FL has roots in the studies that demonstrate strong linkage between FL and household well being. People endowed with low level of FL tend not to plan for retirement, borrow at high rate of interest, and participate less in the formal financial system. FL has been advocated as low intervention technique that has the potential to improve household financial decision-making and ultimately increase saving and welfare. Low level of FL acts as an impediment for the demand of financial services. Fl will boost economic growth and competition in financial sector and more efficient allocation of capital.
The department plans to organize seminars to promote financial literacy so as to awareness and enhance the understating of consumers regarding financial products, markets and concepts such as diversification, asset allocation etc., etc. The department plans to collaborate with the other organizations involved in promotion of FL.