FINANCIAL INCLUSION AND FINANCIAL LITERACY

Abstract

Understanding the basics of managing money is vital for the well being of people and empowering them financially India’s flagship financial inclusion programme, Pradhan Mantri Jan Dhan Yojana (PMJDY), has been able make universal access to a bank account a near reality, but the level of usage of accounts remains quite low. India has now 180 billion accounts. But 48 per cent of the bank accounts have seen no transactions in the last one year, according to the World Bank’s Global Findex database. We must remember that the right measure of financial inclusion is not access, but regular usage.For making successful use of financial services, people need to be literate enough to understand the basics of managing money. This skill is known as financial literacy. In simple terms, it refers to a set of skills that allow people to manage their money wisely along with some understanding of essential financial concepts, not least an appreciation of the trade-off between risk and return