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1. Background Over the past decade, India has undertaken one of the most extensive financial inclusion initiatives globally. Landmark programmes such as the Pradhan Mantri Jan Dhan Yojana (PMJDY) have significantly expanded access to formal banking, with over 57 crore accounts opened and substantia
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Financial literacy in India refers to the ability to understand and effectively apply financial skills such as budgeting, savings, responsible borrowing, debt management, investment planning, risk mitigation through insurance and pensions, and awareness of frauds and consumer rights.
India's financial literacy ecosystem is guided by the National Strategy for Financial Inclusion (NSFI) 2019-2024, focused on expanding access, and the National Strategy for Financial Education (NSFE) 2020-2025, which treats financial literacy as a structured life skill built on a '5C Approach': Content, Capacity, Community, Communication, and Collaboration.
Target segments include farmers, agricultural workers, women and Self-Help Groups (SHGs), students, youth, micro and small entrepreneurs, senior citizens, pensioners, migrant workers, and the urban poor, each requiring tailored interventions.
Key institutions include the Reserve Bank of India (RBI), the National Bank for Agriculture and Rural Development (NABARD), Lead District Managers (LDMs), Financial Literacy Centres (FLCs), and other regulators like SEBI, IRDAI, and PFRDA.
Progress is measured using the RBI's Financial Inclusion Index (FI-Index), which assesses access, usage, and quality of financial services. While usage indicators are strong, the quality score highlights the need for deeper financial understanding.
Challenges include a low depth of financial understanding, rising digital fraud risks, regional and gender disparities, dormant accounts, and limited last-mile digital infrastructure.
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