88
2012 Deeptha Umapathy, Parul Agarwal, Santadarshan Sadhu Centre for Micro Finance 7/26/2012 A Scoping Study of Financial Literacy Training Programmes in India

A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Embed Size (px)

Citation preview

Page 1: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

2012

Deeptha Umapathy, Parul Agarwal,

Santadarshan Sadhu

Centre for Micro Finance

7/26/2012

A Scoping Study of Financial Literacy Training Programmes in India

Page 2: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes
Page 3: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

About the Centre for Micro Finance

The Centre for Micro Finance (CMF) is a non-profit, non-partisan research centre housed within the Institute

for Financial Management and Research in Chennai. The mission of the Centre for Micro Finance is to

improve the accessibility and quality of financial services for the poor through rigorous research, knowledge

dissemination and evidence-based policy outreach.

About Bankers Institute of Rural Development (BIRD)

Bankers Institute of Rural Development (BIRD), Lucknow is a premier institute for providing training,

research and consultancy services in the field of agriculture and rural development banking in India. The

Institute was established in 1983 by National Bank for Agriculture and Rural Development (NABARD).

Acknowledgement

The authors thank the Bankers’ Institute of Rural Development (BIRD), whose generous assistance

and continuous support made this survey and report possible. We express our gratitude to all the

participating institutions for sharing their financial literacy training modules and accommodating our

study in their operation areas; without whose valuable participation it would not have been possible

to fulfill the objectives of the project. We sincerely thank our dedicated surveyors and support team

for their valuable contribution in conducting the survey work. We thank the representatives of all the

organizations- Mr. Amulya Mohanty (Access Development Services), Ms. Elaine Ghosh & Ms.

Mallika Ghosh (Parinaam Foundation), Ms. Preeti Telang (Swadhaar FinAccess), Ms. S. Rama

Lakshmi (APMAS), Mr. Abhishek Patro (eCubeH Research Labs), Mr. Alay Barah (Reach India),

Mr. Shubhankar Jha (ISMW), Mr. N. Rama Krishna (Trident Microfin Private Ltd.), Mr. Sachin

Hirani (Accion International), Vanya Sinha (SEWA Bharat), Ms. Pallavi Panchal (SEWA Bank), Mr.

George Thomas & Mr. Sibu Abraham (ESAF), Simanchala Sahu (College of Agricultural Banking),

Ms. Tamali Kundu (Pradan), Mr. Anand Ayyagari (SKS), Mr. Avik Kedia & Ms. Chidambara Sagar

(Sanchayan Society), Nikita Deshpande (Suryoday MicroFinance), Vivek Kaushik (Partners in

Prosperity) and Jatinder Handoo (FINO) for their cooperation to the study. We look forward to their

kind support in Centre’s future endeavors too.

In addition, we extend our appreciation to CMF interns Tanya and Gedeon Lim for their contribution

to the project. We thank Ajay Tannirkulam and rest of the Centre team members for their guidance

and feedback.

Page 4: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Contents About the Centre for Micro Finance ......................................................................................................... 4

About Bankers Institute of Rural Development (BIRD) ............................................................................. 4

Acknowledgement .................................................................................................................................... 4

Executive Summary ....................................................................................................................................... 7

Chapter 1: Introduction ................................................................................................................................ 8

Chapter 2: Objectives of the study ............................................................................................................. 12

Chapter 3: Methodology ............................................................................................................................. 13

Content Analysis of Modules .............................................................................................................. 13

Management Interviews ..................................................................................................................... 14

Client surveys ...................................................................................................................................... 14

Web survey ......................................................................................................................................... 15

Sampling .................................................................................................................................................. 15

Participants ............................................................................................................................................. 16

Challenges ............................................................................................................................................... 17

Limitations of the study .......................................................................................................................... 17

Chapter 4: Characteristics of Financial Literacy Training Modules ............................................................. 18

Development of module ......................................................................................................................... 18

Macro-Topics .......................................................................................................................................... 18

Sub topics ................................................................................................................................................ 22

Savings ................................................................................................................................................ 22

Borrowing ............................................................................................................................................ 23

Insurance ............................................................................................................................................. 23

Pensions .............................................................................................................................................. 24

Budgeting and planning ...................................................................................................................... 24

Numeracy ............................................................................................................................................ 25

Investments ......................................................................................................................................... 25

Interest rates ....................................................................................................................................... 26

Others Topics ...................................................................................................................................... 26

Methods used ......................................................................................................................................... 27

Chapter 5: Characteristics of FLT (number of sessions, length, TOT) ......................................................... 29

Profile of Trainers ................................................................................................................................ 30

Page 5: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Constrained Modules .......................................................................................................................... 30

Chapter 6: Management views and perception on FLT .............................................................................. 31

Chapter 7: Client survey analysis ................................................................................................................ 33

Client Survey: Basic Findings ................................................................................................................... 34

Client Survey: Youth ................................................................................................................................ 40

Chapter 8: Government Initiatives ............................................................................................................. 44

Financial Literacy and Credit Counselling Centres .................................................................................. 44

Reaching out to FLCCs: ........................................................................................................................ 44

Comparing ‘To be Achieved’ with ‘The Achieved’: ............................................................................. 44

College of Agricultural Banking: Financial Literacy (FL) Workshop & Training ....................................... 46

Background ......................................................................................................................................... 46

Objective ............................................................................................................................................. 46

Content ............................................................................................................................................... 46

Tailored programs for children and students ..................................................................................... 48

Challenges faced by CAB ..................................................................................................................... 48

Chapter 9: Conclusions/recommendations/future research ...................................................................... 49

Chapter 10: Appendix ................................................................................................................................. 51

A1. Participating organizations list/ Content Analysis Grid .................................................................... 51

A2. Questionnaire for Management ....................................................................................................... 53

A3. Questionnaire for Client Survey ....................................................................................................... 54

A4. Tables of Findings for all institutions from Client Survey ................................................................. 67

A5. Questionnaire for Youth Survey ....................................................................................................... 69

A6. Category wise Tables of findings from Youth Survey ....................................................................... 83

A7. Measuring Financial Literacy: A Pan India Sample Survey ............................................................... 85

Sample ................................................................................................................................................. 85

Page 6: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Executive Summary

Managing Finances efficiently is a skill that only a few people are able to cultivate and practice.

Ingredients those are instrumental to developing this essential dexterity include financial knowledge,

financial awareness and financial aptitude. The first two of these three can be fed in through

information sharing, education and awareness generation campaigns but the third one develops over

time and requires assistance from an expert. The package of all these ingredients being provided

through the required mechanisms can be called a Financial Literacy Training. The role of Financial

Literacy in improving the ability of people (especially low income people) to manage their cash flows and

to make judicious financial choices has been widely acknowledged and in wake of this, various financial

literacy training programmes are being designed and implemented across the country.

This study aims at understanding the scope of different financial literacy training programmes, that are

being implemented across India, from both an implementer’s and beneficiaries’ perspective. For the

purpose of the same, discussions were held with all the stakeholders (module developing agencies,

implementing organizations, representatives of government initiatives and beneficiaries) in the form of

structured and unstructured interviews. Specific modules were also collected and analysed for their

content and methodology.

Most of the participating organizations seem to follow a demand-driven approach and report to be

developing and modifying modules as per the feedback from the community. But some of them are still

very specific in the kind of topics they cover in their training; this applies especially to MFIs that focus

mostly on imparting education on loan products. From different training modules, study derives that

‘savings’ and ‘borrowing’ are the most popular topics and other important topics like ‘insurance’,

‘pensions’ and ‘investments’ are not paid much attention to. Planning and Budgeting is another

common theme but it lacks the extensive follow up with the trainees that is required with such a hard

learned activity. On the methodology front, innovative ways are being devised and most of the

initiatives are proving successful. But concern is the lack of idea and experience sharing among

organizations due to which most of the innovative methods are left being used only with some isolated

samples of target community.

From interviews with beneficiaries, a gap between their perceived financial capability and actual

financial ability has been observed. Also, apart from numeracy, beneficiaries scored low in all other

subjects especially in those of money management and knowledge of formal financial products.

Government has also instituted some initiatives in this regard but has not been able to successfully

reach out to the numbers targeted. This is where it needs to communicate the idea and its objective

clearly to those who are being accorded the responsibility (like FLCC Centres) of imparting financial

literacy. College of Agricultural Banking is working towards creating a promising platform that can be

used as a hub of information with all the developing and implementing agencies sharing their modules,

ideas, innovations and experiences. Majority of institutions welcome this resource but are yet to

contribute their bit towards it.

Page 7: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Chapter 1: Introduction

Financial Education has gained a prominent role in economic development policies because of the

strong associations that have been confirmed by researchers between households’ financial literacy

levels and participation in financial markets. Courchane and Zorn (2005) provide evidence that a causal

connection runs from financial knowledge to financial behavior to credit outcomes.1 Compelling

evidence from various researches conducted in developed and developing countries echo that

households’ with low financial literacy levels are also households that tend not to plan for retirement,

borrow at higher interest rates, acquire fewer assets and participate to a lower extent in formal financial

markets. (Lusardi and Muira, Cole & Zia)2 With the end goal of ensuring universal access to formal

financial markets and increasing the number of people who use formal financial services, building

financial capability is being considered an important solution for increasing access of financially excluded

populations around the world.

There are two parts to the challenge of including people in the formal financial environment – providing

access and ensuring usage. While access to formal financial service providers is a continuing challenge in

many countries, innovative efforts such as mobile money, biometric KYC norms and agent based service

providers are breaking some of the demand side barriers customers face while addressing supply side

constraints for formal financial service providers as well. Unfortunately, usage of products offered to the

newly included populations continues to remain low in general, barring a few exceptions like M-PESA in

Kenya. For example, the high level of dormancy in No Frills Account (NFA) around India is an indication

that demand side constraints remain unaddressed.

Demand side constraints with respect to access to and usage of formal financial services are as

heterogeneous and multi-dimensional as the population of low income households in India. The table

below summarizes the different constraints faced by a potential customer.

Constraints Examples

Physical/Geographical Bank branches are too far

Temporal Transactions take too long

Quality Products are rigid and badly designed

Knowledge Do not have information about various products or

documentation seems complex

Psychological Fear of mistreatment from Bank officials

Table 1: Constraints of a customer of financial services

The role of financial education or financial literacy can be seen as building financial capability of people

to understand the services and products that are being offered to them, understand how to use them to

1 Courchane, Marsha, and Peter Zorn. 2005. “Consumer Literacy and Creditworthiness.”

2 Lusardi, Annamaria, and Olivia S. Mitchell, 2007, Baby Boomer Retirement Security: TheRoles of Planning, Financial Literacy,

and Housing Wealth, Journal of Monetary Economics 54, 205-224.

Page 8: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

serve their needs optimally and know where to go for assistance. Lusardi and Mitchell (2007), show that

households with higher levels of financial literacy are more likely to plan for retirement and those

planners arrive at retirement with substantially more assets than non-planners.3 Mandell (2007) also

links higher levels of financial literacy to more responsible financial behavior, such as writing fewer

bounced checks, and paying lower interest rates on mortgages.4 Collins (2010) summarises a

randomized field study that focused on evaluating a highly targeted mandatory financial education

curriculum for very low-income clients in a housing voucher program. The study showed that financial

literacy education is related to improved financial behaviour. The results were a significant increase in

savings account balance, a modest decrease in the percentage of clients with poor credit ratings and

improvements in self-reported understanding of financial issues by clients.5

However, financial literacy could mean different content for different people. While stocks and mutual

funds will be interesting for young middle class salaried individuals, who already have access to savings

accounts in banks and possibly own a credit card or two, for a rural shop owner, it could mean learning

to access more rudimentary financial tools.

It is becoming apparent that participating in the formal financial environment can be an extremely

technical and overwhelming experience. When countries were in the nascent stages of globalization, the

government used to offer a small range of options to its people and responsibility for their financial

welfare remained with the government and public sector financial institutions. But this has changed

over the years and the onus for planning for the future and managing one’s financial health has been

transferred to every individual with some help from their employers (who could be private or

government organizations). This requires informed and continued participation in the formal financial

markets. Additionally, the financial environment is now populated by a huge range of complex and

nuanced products that are designed to help people save, invest, plan long term expenses, acquire

assets, access credit, insure against various risks etc.

In an increasingly complex financial environment, literate and working populations tend to feel

overwhelmed by the range of options and minute differences in technical jargon that could make or

break important financial investments. When we place an already vulnerable section such as the rural or

urban poor, who are financially excluded from formal financial services most of the time, have negligible

levels of education and no formal finance or economics training, the problem multiples exponentially.

With no social protection or financial safety nets they are more exposed to whims and vagaries of life.

But building financial capability of people at all socio economic levels has become essential to ensure a

stable and well-functioning global financial environment. With the recent global financial crisis

3 Lusardi, Annamaria, and Olivia S. Mitchell, 2007a. Financial Literacy and Retirement Preparedness: Evidence and Implications

for Financial Education.î Business Economics, 42(1): 35-44. 4 Mandell, Lewis, 2007, Financial Education in High School, in Annamaria Lusardi ed.: “Overcoming the Saving Slump: How to

Increase the Effectiveness of Financial Education and Saving Programs” (SUNY-Buffalo Press).

5 Collins, J. Michael. “Effects of Mandatory Financial Education on low-income clients”October 2010.

Page 9: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

stemming from the developed nations and growing number of delinquencies in microfinance sectors in

some developing countries, this has point has been driven home repeatedly.6

Governments, private organizations, financial institutions and international organizations have been

focusing a lot of funds toward improving people’s levels of financial literacy. While researchers are still

unsure about the dynamics of how higher financial literacy levels affect financial market participation,

financial literacy programs are being offered to a wide range of people around the world. School

children, new recruits, rural women, small farmers etc. have all been provided some form of financial

literacy training with an expected outcome of higher participation in the formal financial system.

Unfortunately, behavioral impacts of some of these programs have been insignificant, despite high

impact on knowledge indicators regarding financial products and services. Cole, Sampson and Zia (2011)

take evidence from surveys in India and Indonesia, and a field experiment to test theories of low

demand for financial services in emerging markets. The survey results found a strong correlation

between financial literacy and financial behaviour. This indicated that financial literacy is paramount,

and that educated consumers will make better financial decisions. However, the results of the field

experiment showed that education program had a modest effect as it simulated demand for bank

accounts only from those with low levels of education or financial literacy. In contrast, a second

intervention in the form of small subsidies increased demand significantly, indicating that a financial

education program is not an effective tool for promoting usage of bank accounts.7

This insignificant impact could be explained by the number of unanswered questions that exist in this

new but growing area of research and implementation. Due to the heterogeneity of the population’s

educational background, cognitive capabilities, access to financial products (formal, semi-formal and

informal) and financial needs and aspirations, developing content and methods of training can be a

complex and highly specialized task. While school students’ might respond positively pedantic and

complex issues relating to equity and debt due to their background in economics or commerce, rural

farmers might be more interested in knowing where the nearest source of credit is. While men might be

interested in business or farm related financing, women might be interested in household budgeting

and planning for their children’s health or education needs. While people in South India do not worry

about protecting their homes against flooding or such natural disasters, people in island countries might

be looking for such solutions. For instance, a study by Lusardi (2005) examines the effect of retirement

seminars in simulating savings across older households and races. The study focused on African-

American and Hispanic races finds a large heterogeneity in the financial and savings behavior African-

Americans and Hispanics, and Whites. Estimates of the study show that seminars have some effect on

savings, particularly, to those at the bottom of wealth distribution, and to those with low education.

Findings thus suggest that education programs offered by the Government or employers should focus

6 “The Case for financial literacy in Developing Countries: Promoting Access to Finance by Empowering Consumers.” OECD, The

World Bank, DFID, CGAP 7 Cole, Shawn A., Thomas Sampson, and Bilal Zia. "Prices or Knowledge? What Drives Demand for Financial Services in Emerging

Markets?" Journal of Finance 66, no. 6 (December 2011): 1933-1967.

Page 10: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

on basic financial planning strategies and in the case of minorities, be more targeted and tailored to

their specific needs. 8

In this complex multidimensional environment, some of the questions that remain unanswered are:

1. What content is relevant to the target population?

2. What are the dynamics of information leading to behavioral change and action?

3. What is the purview of financial education in financial inclusion?

4. Do short term financial training work better for some populations in comparison to other?

5. Is the design of training programs (length, method of teaching, use of games or other interactive

media) dependent on target population demographics or complexity of topics?

6. What levels of financial literacy are required to be considered financially capable?

The list can be endless even when the population if narrowed down to India’s rural and urban poor. But,

aside from the supply side perspectives in designing these programs, to effectively answer many of the

questions surrounding the role of FE in facilitating financial access and participation, one needs to

understand the demand side constraints faced by low income households. While there is strong

empirical evidence supporting supply side interventions for improving financial access (by governments

and financial institutions), these programs were designed with the assumption that there were no

demand side constraints. For example, the offer of ‘No-Frill Accounts’ with lower KYC documentation

and zero balance requirements, assumed that take-up and usage of this product would be high, but

empirical evidence pointed to the contrary, indicating the presence of demand side constraints.

The same can be said for designing financial literacy programs. There are supply and demand

side perspectives that need to be balanced to achieve the required outcomes. This study attempts to

document the current trends in India with regard to financial education (FE)/financial literacy training

(FLT) for low income households in urban and rural areas. The study tries to include different financial

institutions like societies, NGOs, NBFCs, banks, MFIs and capacity building organizations in order to

understand the different models being adopted and also capture the differences in outcomes between

these programs. By using a combination of research techniques and data collection being conducted at

multiple levels, the study attempts to capture the supply and demand side perspective of these

programs.

Some of the questions this study will be answering are:

1. What kinds of programs are being offered to the low income clients in urban and rural India?

2. Who are offering these programs?

3. Are these programs accomplishing their envisioned goals?

8 Lusardi, A."Financial Education and the Saving Behavior of African-American and Hispanic Households,"Working paper,

Dartmouth College (2005).

Page 11: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Chapter 2: Objectives of the study

There has been a sudden surge in interest on topics related to consumer protection and financial

literacy of the poor in India and across the world. The rise of microfinance in the India and its

subsequent fall during the Andhra Pradesh crisis has played an important role for this debate and

dialogue. While a large majority of financial institutions and regulators unanimously agree on the

importance of financial literacy training, very little is spoken of about how to define and measure

financial literacy and therefore what financial literacy training should entail.

This study is designed to scope out the various modules that are being used in the Indian microfinance

sector and outside for imparting financial literacy education, and also engage in dialogue with financial

literacy training organizations of various legal forms to understand how they view this topic and how

they provide financial literacy training (FLT). The study also intends to identify the attributes of the

training programmes that are well received by the beneficiaries and the ones that need a modified

methodology or approach.

Page 12: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Chapter 3: Methodology

The study has been designed with different levels of data collection and analysis due to the complexity

of the topic. To fulfill the primary objective, contents of various financial literacy modules that are

currently offered to the beneficiaries were analyzed to understand the basic topics, methods and other

elements that are being used. Management interviews were conducted with the person/ team in charge

of development and implementation of FLT to get a deeper understanding of how these modules were

developed and get the organizational perspective on financial literacy training.

A short survey of beneficiaries of FLT was conducted at the client level for select organizations to

understand the levels of financial capabilities, behavior and numeracy and financial product awareness

among FLT beneficiaries. Finally, a short web survey was also conducted to get a sense of how many

MFIs in India self-report that they conduct financial literacy training and what kinds of topics they cover.

Content Analysis of Modules

To assess the FLT that are currently available and offered to the beneficiaries across India, we studied

FLT modules of 20 organizations. Modules were analyzed using a framework (Refer to Appendix A1)

that provided a score of 1 for the presence of a topic. After analyzing all the modules of the sample, nine

macro topics were identified. These topics also combined to provide any recipient a holistic picture of

financial planning. For each of these macro topics, modules were further scored for specialized topics

such as loan repayment strategies under borrowing or credit bureau. Below is a table that provides

details on the macro topics and their sub-topics as well.

Modules were also scored on the number of the games and stories that were used. Use of visual aids

such as movies, flip charts, posters and other interactive activities such as role playing, group discussions

etc. were also scored. Techniques such as session recaps, providing handouts or gifts were also noted.

The latter aspects were not scored as there is conflicting views on whether these are effective methods

to encourage participation or retain participants.

To summarize, in this content analysis section, modules were scored for based on how many different

macro topics were covered, how many sub –topic were covered under each macro topic, number of

games and stories that were incorporated in the module, other interactive methods and visual aids that

might have increased the interest level among participants.

Page 13: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Sample Questions posed in the interview:-

1. How the trainers selected / what is their qualification?

2. How do you think your training programme has benefitted the participants?

3. Was the impact of training any different than what you had expected before implementing it? How?

4. From your experience of planning and implementing the training programme, what do you think is the best approach towards imparting Financial Literacy?

5. Are you planning to reach other areas with the same concept and module?

6. What kind of changes would you like to introduce in your present approach and module? Why?

Management Interviews

Management interviews were scheduled with

the most knowledgeable person/team in the

organization that would be able to provide

information about the genesis of FLT in their

organization, its evolution from beginning to

end, the organization’s view about their module

and about FLT in general etc. (Refer to Appendix

A2 for the questionnaire). These interviews

were used to capture any changes that might

have been made by the organization if they

were using standard module developed by a

capacity building organization. In case of them

using a self-developed module, the

management interview captures aspects of their

FLT that cannot be discerned from reading their

module (Refer to Chapter 6 for details).

Client surveys

A sample of beneficiaries associated with selected institutions was interviewed to understand their

perspective on the financial literacy training programme. Apart from the regular beneficiaries, surveys

were also conducted with youth who were trained by one of the participating institutions (Refer to

appendix A3 for questionnaire administered with regular beneficiaries and refer to appendix A5 for

questionnaire administered with Youth). Because youth are the new ones to enter the financial

environment where they are required to make their own financial decisions using their hard earned

income, it is important to teach them the best financial practices so that they do not face the problems

that their older generations are facing now. The idea is to address the ill-informed financial decision

making at the very beginning of an individual’s earning cycle.

Twenty beneficiary surveys were conducted for each of five organizations9 and forty were conducted for

the youth survey, in total covering seven states across India, spanning rural and urban populations. The

surveys were designed to capture information on the beneficiary’s current levels of awareness about

financial products, perceptions about certain financial behaviors, basic numeracy levels and also

information on their perception of their levels of knowledge in various aspects of financial management

before and after receiving the financial literacy module. This allows us to gauge if the beneficiaries were

9 Access Development Services, Parinaam Foundation, APMAS, Swadhaar FinAccess and Samhita/ eCubeH

Research Labs

Page 14: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

already financially literate if their after scores were high, in addition to being able to observe if their

perceptions of their levels of financial management knowledge match with actual information they

provide us. The before and after score also allows us to analyze which modules were successful in

increasing knowledge levels and which modules were able to affect behavioral change as well. (Refer to

Chapter 7 for details).

Table 2: Examples of questions in Client Survey

Female Beneficiaries Youth

What were the methods and tools used during the training programme?

What did you like the most in training programme/ What didn’t you like at all?

How comfortable were you about subjects (Savings, Borrowing, Numeracy, Money Management

etc.) before and after the training programme?

Suppose you have Rs. 2000 to save. You can

either save this in an account which earns 4%

interest or repay an already existing loan of Rs.

2000 that charges 20 % interest. What will you

choose to do with the 2000 rupees that you

have got?

Kapil is a furniture salesperson at a large

furniture store. He receives a monthly base

salary of Rs. 20,000 plus a ten-percent

commission on his sales. Last week there was a

sale at the store. Kapil’s sales for the weekend

brought his monthly total to Rs. 50,000. Kapil

wants to estimate his pay for the month. What

is the estimate?

Vimla is a daily wage labourer with irregular

income. She wants to save money weekly and

draw whenever needed. What type of savings

account would you suggest her to open?

Imagine that the interest rate on your savings

account was 1 percent per year and inflation

was 2 percent per year. After one year, would

you be able to buy more than, exactly the

same as, or less than today with the money in

this account?

Web survey

The web survey was initially designed to increase the coverage of the number of organizations the study

was able to include in the sample. But the low response rate for the web survey limited its usage

significantly. It was designed to gauge organization’s perception of what they considered financial

literacy was and what topics they provided as training for their clients if they reported to be providing

FLT. The web survey also collected information on what kind of a module was being used to understand

the extent standardized modules were being used.

Sampling Organizations for management interviews were shortlisted after some expert interviews and a scoping

exercise to understand how many unique financial literacy modules are being used. Attention was paid

to ensure that different states in India were covered and as many of the legal forms of organizations in

Page 15: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

the development sector were included in the study. Phone interviews were conducted to elicit more

information on the organization’s FLT and also their willingness to participate in the study. Their

modules were collected and management interviews were conducted in person or over the phone.

For client surveys, as much of a rigorous and random selection of sample was ensured. For e.g., a region

was randomly selected from all the areas FLT was provided, and consequently a smaller unit of

geography was randomly selected and finally after the organization provided the complete list of

individuals who were provided FLT in the smaller geographic unit, 20 beneficiaries from the list were

randomly selected and interviewed.

A list of MFIs who were registered on the MIX market database was compiled and an email invitation to

take part in the web survey was sent to every organization that had a working email address. 46

organizations were contacted over phone and email to solicit their participation in the survey and 18

responses were received over the stipulated 3 weeks that was provided to complete the survey.

Participants A total of 18 organizations made their modules available for content analysis and management

interviews were conducted for all of these organizations. Client surveys were conducted for 6 of these

organizations across 7 states, covering urban and rural populations.

Table 3: Participant details

While the study was not able to cover beneficiaries of every organization whose module is

analyzed in the study, the methodology has tried to include urban and rural beneficiaries in addition to

SHG, JLG and individual clients. In addition, a survey was conducted with urban youth from private and

government schools to shed light into the usefulness of providing FLT to youth. The table below provides

details of how many organizations were contacted initially and how many were finally included in the

study. For this study the organizations were categorized as:

NBFC/MFI – Non banking financial corporation/ Microfinance Institution

SHPI – Self help group promoting organizations

Cooperative Banks (Coop.)

Classification Contacted Responded ModulesManagement

Interviews

Client

Interviews

NBFC/ MFI 4 5 4 0

SHPI 1 1 1 1

Cooperative Banks 3 3 2 0

DO-MFI 3 3 5 2

DO-F 1 1 1 1

DO-P 2 2 2 1

CBO 5 5 3 1

Total 69 19 20 18 6

69

Page 16: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Development organizations affiliated with an NBFC/MFI (DO-MFI)

Development organizations specializing in providing Financial services (DO-F)

Development organizations covering multiple aspects of poverty (DO-P)

Capacity building organizations (CBO)

Challenges While conducting this study we faced several challenges that are worth mentioning:

a. Getting access to modules as there were issues with the copyright

b. Language of modules

c. Time availability among organizations

d. Conducting client interviews in different languages

Limitations of the study Due to time and funding constraints, the FLT programs were not evaluated by one very important factor

– the process of implementation. The quality of the trainers, where the training takes place, how

consistently the training occur, what time of the day they happen, how interactive are these sessions

etc. all important determinants to the effectiveness of the training program.

Another limitation is that several important organizations like SEWA, Chaitanya and few more were not

included. SEWA’s module was one of the first FLT programs to be implemented in India and it does pose

as a severe limitation in our study at not being able to conduct client interviews with their recipients.

The management interviews unfortunately were never conducted with the person who was in-charge of

the development of the module. Especially with larger and older organizations, the research team was

able to speak with someone who is currently in-charge of implementation and not the person who

spearheaded the development of the module.

Page 17: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Chapter 4: Characteristics of Financial Literacy Training Modules

Development of module Four of the eighteen organizations that were included in the sample were capacity building

organizations that developed different training modules for other organizations. They were Accion

International, Indian School of Microfinance for Women (ISMW), Reach India and Access Development

Services. Two of the organizations in the sample (not including Accion itself) used Accion International’s

FLT module and three used ISMW’s FLT module while the remaining eleven organizations used modules

that their organization developed to suit their needs uniquely.

In the web survey, eighteen organizations responded to the

invitation to participate and completed the web survey. Twelve

reported themselves to be NBFCs and six were NGOs. While all the

NBFCs reported that they developed their own modules, two of the

NGOs used ISMW and Freedom From Hunger modules each while

the remaining four reported that they developed their own module.

The data collected in the study indicates that a majority of financial

literacy trainings provided around India are designed by individual

organizations and therefore would vary in topics, methods and impacts enormously. Without a central

repository of these modules and knowledge sharing about organizations’ FLT experiences, there is

concern that significant time and financial resources are lost in re-inventing the wheel when it comes to

best practices, topics, methods and pitfalls of FLT.

Macro-Topics The content of a training program plays an important role in being effective. Before analyzing the

content of the modules, it is important to understand what the end goal of financial literacy trainings

need to be.

From extensive literature reviews on the subject, it can be concluded that financial literacy training or

financial education should enable people into making better financial decisions, increase their levels of

familiarity with products and tools around and also know where to go for information or advice on

sophisticated aspects of financial management. Specific topics or content guidelines change across

countries, across urban and rural regions, across different target populations and also are contingent

upon who develops the literacy module. But, if financial literacy training’s end goal were to equip its

beneficiaries with information on all aspects of financial management that is needed throughout a

lifetime, the following topics would need to make an appearance in FLTs in varying levels of detail:

Savings

Borrowing

Formal Banking products

Budgeting and financial planning

Legal Status NumberModules

Used

NBFC 12

Self

Developed

NGO 4

Self

Developed

NGO 1 ISMW

NGO 1

Freedom

From Hunger

Web Survey

Page 18: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Insurance

Pensions

Interest rates

Investments

Numeracy

In order to understand some of the important characteristics of financial products (formal or informal)

such as interest rates and payout amounts, a basic level of numeracy is required as well. A study

conducted by CMF in India did ascertain that without addressing numeracy issues in the participants,

complex notions such as ‘evaluating financial trade-offs’ cannot be taught effectively10. Study found that

Financial Education is effective in increasing awareness of financial products and services. It can also

positively impact individuals’ attitudes towards the purchasing and recommendation of formal financial

services and planning tools but a change in financial behavior requires good numeracy skills.

A total of ten macro topics (including the list of nine topics identified from the literature survey

and another category that would represent anything not noted in list of nine topics) were used to build

the content analysis framework for this study as shown in the following sub-sections.

Table 4: Macro topics and the respective organization distribution

No

.

Topic

Number of FLT modules with topic by organization type11

Total MFI CBO Coop DO-MFI DO-P DO-F SHPI

1 Savings 15 2 4 3 3 1 1 1

2 Borrowing 17 4 3 3 3 2 1 1

3 Banking products 9 1 1 3 2 1 1 0

4 Insurance 7 1 2 2 0 1 1 0

5 Pensions 5 1 1 2 0 1 0 0

6 Budgeting and

Planning

13 2 3 3 3 1 1 0

7 Interest rates 10 2 2 2 1 1 1 1

8 Investments 6 1 2 2 0 0 1 0

9 Numeracy 2 0 0 0 2 0 0 0

10 Other12 7 1 1 2 2 0 1 0

The disaggregation of coverage of an FLT topic by the type of organizations was done in this manner in

order to understand if objectives of an organization would play a role in determining the topics of FLT

10

Unpacking the Causal Chain of Financial Literacy (Carpena et.al); Sept. 2011 11

MFI: Micro Finance Institutions, CBO: Capacity Building Organizations, Coop: Cooperatives, DO-MFI: Development Organizations affiliated by an MFI, DO-P: Development Organization covering multiple aspects of Poverty, DO-F: Development Organization specializing in providing financial services, SHPI: Self Help Group Promoting Institution 12

Currency Recognition, Documentation, Information on Credit Cards, PAN Card etc.

Page 19: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

program. The intent to train the beneficiaries in particular topics could be an indicator of what the

organization thinks the beneficiaries lack, or what they feel will be most beneficial to their relationship

with their client.

An immediate observation from Table 4 is that even basic topics such as savings and borrowing do not

appear in many of the FLT modules offered by various types of organizations. The topics that appear

most often in FLT modules in the sample are Borrowing, Savings, Budgeting and planning and Interest

rates of some kind (Simple/compound, flat/reducing, fixed/floating) in that order of decreasing

frequency. The second observation is that the FLT module of sampled SHPIs covers the least number of

macro level topics. MFIs, CBOs and Cooperative banks share almost the same distribution on topics

covered because some of the MFIs and Cooperative banks adopted the CBO modules for their

beneficiaries. But it is worth noting that in all three of these modules, numeracy has not been addressed

in any form. In the entire sample, numeracy related training is provided only by two of the three

development organizations associates with MFIs.

In order to analyze how self-developed modules differed from the various CBO modules, the CBO

modules were analyzed separately with self-developed modules categorized by various organizations

and Table 5 provides this information:

Table 5: Number of FLT modules with topic

No.

Topic

Number of FLT modules with topic

CBO

1

MFI CBO

2

Coop DO-

MFI

DO-P DO

-F

CBO

3

CBO

4

SHPI

1 Savings 1 0 1 1 1+1 1+0 1 1 1 1

2 Borrowing 1 1+1 1 1 1+1 1+1 1 0 1 1

3 Banking

products

1 0 0 1 1+1 1+0 1 0 0 0

4 Insurance 1 0 0 0 0+0 0+0 1 0 1 0

5 Pensions 1 0 0 0 0+0 0+0 1 0 0 0

6 Budgeting and

Planning

1 0 1 1 1+1 1+0 1 0 1 0

7 Interest rates 1 0+1 0 0 0+1 1+0 1 0 1 1

8 Investments 1 0 0 0 0+0 0+0 0 0 1 0

9 Numeracy 0 0 0 0 1+1 1+0 0 0 0 0

10 Other 1 0 0 0 1+1 1+0 0 0 0 0

When the four CBO modules are analyzed separately, it was interesting to note that only one of them

scored 9/10 topics, while one covered only savings another provided only savings, borrowing and

budgeting. The assumption that capacity building organizations might have a more holistic view of what

needs to be included in FLT modules does not hold true in our sample.

Page 20: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Key Findings 1. Almost all the organizations cover the topics of savings and borrowing (specially the importance of

repayment).

2. Interest rates are also discussed by many of the participating organizations but not in great detail.

3. Budgeting and Planning is also a widely discussed topic but the follow-up on actual practice is

significantly low.

4. Topics like Pensions, Insurance and Numeracy are unfortunately not very popular.

5. Some interesting topics like: identifying fake currency and interesting methods like teaching numeracy

using bindis, sticks, leaves etc., are successfully covered and used by some institutions.

It was interesting to note that one of the development organizations that provide overall poverty

alleviation assistance to rural households (DO-P) provides only information on borrowing in their FLT

module. MFIs that do not use an existing CBO’s module cover only 1-2 topics, these topics are directly

related to their product – borrowing and interest rates. The SHPI as well provides only information that

is pertinent to the products they promote – savings, borrowing and interest rates. From all the above

observations, one can see that very few of the organizations are currently providing modules that are

not directly linked to the products and missions of the providers and thus, one/ few aspect of financial

management, that are generally aligned to an organizations’ products and missions do get labeled as

financial literacy training. Perceptions of organizations regarding financial literacy training is an

important road block in ensuring an effective program reaches the audience.

In the web survey, a question asking if the organization offers financial literacy training has the following

answer options:

- Yes, we provide information on all aspects of financial management (savings, debt, budgeting etc)

- Yes, but only information related to products (loans, over indebtedness etc.) - No, we provide only product related information

While three of the twelve NBFCs who responded in survey chose the first option, seven chose the

second option and only one chose the third. All six NGOs who responded chose the first option. While

the second and third options have the same result for the organization’s clients – they receive

information about the loans products, the perception of the organization is captured in the response

choice. Seven of the NBFCs that chose the second option think that they provide some form of financial

literacy training while they provide information on loans while the one NBFC that chose the third option

did not consider providing information on their loan product a form of financial literacy training.

Of the thirteen organizations in Table 5, five of the thirteen organizations (both the MFIs, SHPI, one of

the DO-P and one CBO) do not provide information on Budgeting and planning. Budgeting and planning

is the only topic that is not directly tied to any financial product and their presence or absence in a

module could determine whether the beneficiaries were given primarily product specific information or

were provided strategies to handle their money better. In our sample, of the twelve NBFCs that

responded to the web survey, only one mentioned cash flow management is a topic included in their

FLT.

Page 21: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Savings Example Parinaam Foundation gives savings boxes to

their participants to help their children

inculcate the habit of saving

Saving Posters are used by Swadhaar

FinAccess to suggest the participants ways of

saving small sums of money regularly (by

practicing the following):

1. Avoid packaged food or food cooked

outside as the time and money

required to make snacks at home is

lesser.

2. Store groceries properly to reduce

the chances of them getting spoiled

and re-bought.

3. Cover cooking vessels

Keep all cooking ingredients as well as

matchbox/lighter ready before turning the gas on.

Key Findings 1. ‘Savings Goals’ and ‘Savings Discipline’ are more popular topics than ‘Comparison of Savings Channels’.

2. Few organizations discuss about the role of credit bureaus and important topic like ‘Repayment

Strategy’; ‘Importance of Repayment’ is a popular topic though.

3. Institutions that include ‘insurance’ in their training modules talk more about its types and basics and

only 1 of them discusses the points to remember while buying an insurance product.

4. Budgeting and Planning covers topics like ‘type of expenses’, ‘making a financial plan’ and

‘distinguishing between needs and wants’.

5. ‘Investment’ when covered, is not discussed in detail..

Sub topics This sub section discusses the types of topics that are discussed by all the participating organizations and

the details in which they cover them.

Savings In the entire sample, only three organizations do not

provide any information on savings – the two MFIs

that do not use an existing CBO’s FLT module and

one of the DO-P organizations. While some modules

make a passing mention of the importance of

savings, and the ability of everyone to save, some

FLTs stand apart from others by using creative

methods to instill ideas and providing suggestions to

help the audience save. Fourteen of the fifteen

organizations that provide information on savings,

also provide information on savings goals which can

be long term, short term or medium term goals.

Some FLT modules even go as far as breaking these

goals down to easy to achieve daily amounts of

money. Thirteen of the fifteen organizations talk

about the importance of discipline while saving. The

ant and the grasshopper story seem to be the

unanimous choice of story to exemplify this principle

of saving little amounts everyday and starting as early as possible. Only ten of the fifteen organizations

compare the various savings channels, discuss each channel’s benefits and pitfalls with the audience.

Topics NBFC/MFI CBO Coop DO-MFI DO-P DO-F SHPI For All

Savings 2 4 3 3 1 1 1 15

Different savings goals 2 4 3 3 1 0 1 14

Savings discipline 2 4 3 3 0 1 0 13

Compare savings sources 1 2 3 2 1 0 1 10

Table 6: Savings Categories

Page 22: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Borrowing

Almost all the modules make a mention of debt/loans/borrowing leaving aside the one CBO that

provides information only on savings. Possibly stemming from the many repayment delinquencies in

India, twelve of the seventeen organizations talk about the importance of repaying a loan and also try to

explain what a good loan and a bad loan is. This is usually an exercise to help people understand that

loans should be taken only for an income generating activity. Interestingly, only eleven organizations

compare credit sources and discuss the pros and cons of the different options with the audience. Ten

organizations break down the important characteristics of a loan product (formal and informal) to help

the audience better analyze the different sources and products before borrowing. Eight of the

organizations talk about multiple borrowing and ghost lending as a phenomenon. While only two

organizations talk about the credit bureau and explain the role of the credit bureau to the audience. This

last topic makes an appearance in one MFI’s module that doesn’t use a CBO module and one DO-MFI’s

module. Two organizations discuss repayment strategies and break down the idea of paying principle

and interest amounts in each installment to ensure the debt gets paid within a stipulated period of time.

Table 7: Borrowing categories

Insurance

The most disheartening finding from study the modules was the lack of information on

insurance. Only seven of the eighteen organizations made a mention of insurance in their FLT. And only

six walked the audience through the basic concepts and terms associated with insurance (usually life

insurance). Two organizations explained the various types of insurance policies there are in the market

and only one organization highlighted the important points to remember when buying insurance.

Table 8: Insurance categories

TopicsNBFC/

MFICBO Coop DO-MFI DO-P DO-F SHPI For All

Borrowing 4 3 3 3 2 1 1 17

Compare credit sources 1 2 3 2 2 0 1 11

Importance of repayment 2 2 3 2 2 0 1 12

Qs about loan characteristics 2 2 2 2 1 0 1 10

Credit bureau 1 0 0 1 0 0 0 2

Multiple borrowing and ghost lending 2 2 2 2 0 0 0 8

Good loan or bad loan 2 3 3 2 1 0 1 12

Repayment strategy (only interest vs

principal and interest repayments)1 1 0 0 0 0 0 2

Repayment ability 3 2 2 1 0 0 0 8

Types of formal loans 0 0 0 0 0 1 0 1

TopicsNBFC/

MFICBO Coop DO-MFI DO-P DO-F SHPI For All

Insurance 1 2 2 0 1 1 0 7

Basic terms and conditions 1 1 2 0 1 1 0 6

Types 1 2 2 0 1 0 0 6

Questions to ask before taking

insurance0 0 0 0 1 0 0 1

Page 23: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Pensions

Pension makes an even more scant appearance in the sample’s FLT. Only five organizations talk

about the importance of pension in addition to providing an introduction to the concept of saving for old

age and no more information is provided on this topic.

Table 9: Pension categories

Budgeting and planning

60% of the sample’s FLT features some aspects of budgeting and planning in their FLT.

Interesting Sub topics Organizations

Need vs Wants ISMW, Sewa Bank, Sewa Bharat and others using

ISMW module, Parinaam Foundation

Inflation ISMW, Sewa Bank, Sewa Bharat and others using

ISMW module, Parinaam Foundation

Table 10: Budgeting and planning sub topics and organizations

The session usually talks about the various types of expenses a family experiences in their everyday lives

(long term, short term, unexpected and expected etc.) and then talks about the importance of making a

budget or financial plan, track expenditures as closely as possible and separate the needs from wants to

cut back on unnecessary expenses. Only two organizations talk about using a financial diary to track the

household’s cash flow while five organizations talk about inflation and how that will affect the

household’s finances.

Table 11: Budgeting and planning categories

TopicsNBFC/

MFICBO Coop DO-MFI DO-P DO-F SHPI For All

Pensions 1 1 2 0 1 0 0 5

TopicsNBFC/

MFICBO Coop DO-MFI DO-P DO-F SHPI For All

Budgeting and planning 2 3 3 3 1 1 0 13

Types of expenses: short term,

long term, unexpected, expected2 3 3 3 1 0 0 12

Financial plan and making a

balance sheet2 3 2 3 1 1 0 12

Needs vs Wants 2 3 3 2 0 0 0 10

Financial diary 0 0 0 2 0 0 0 2

Inflation 1 1 2 1 0 0 0 5

Life Cycle of Events 1 1 2 0 0 0 0 4

Planned vs Unplanned Life 1 1 2 0 0 0 0 4

Page 24: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Numeracy

A surprisingly low number of organizations attempt to address the issue of low levels of numeracy

among their audience in their FLT modules. While many of them use stones/leaves and bindis to explain

topics that require counting or representing numbers, only two organizations teach their audience

addition, subtraction, multiplication and division in order to explain interest rates and other calculations

they need to make to track expenses or build saving plans. Both these organizations use the calculator

to teach their audience basic numeracy. Given the research findings on the effects of low level of

numeracy with individual’s decision13, it seems that there is a need to incorporate numeracy training in

the FLT modules.

Investments

One of the lesser mentioned topics in FLT modules in the sample are about investments. Only six

organizations talk about investing and provide ideas for investing money in financial products such as a

recurring deposit or fixed deposit. Five of these organizations also try to explain what could be a risky

investment and what options could be considered safe. These organizations also try to differentiate

between assets and liabilities, expenses and investments for their audience. One module talks about

more sophisticated modes of investments like the share market and mutual funds.

Table 12: Investment Sub topics and organizations

Interesting Sub topics Organizations

Identify asset vs liability/ expense vs investment Access Development Services and organizations

implementing ISMW module

Information on Share Market Sanchayan Society

Table 13: Investment categories

13

Unpacking the Causal Chain of Financial Literacy (Carpena et.al); Sept. 2011

TopicsNBFC/

MFICBO Coop DO-MFI DO-P DO-F SHPI For All

Investments 1 2 2 0 0 1 0 6

Ideas for investments 1 2 2 0 0 1 0 6

Secure investment options 1 2 2 0 0 0 0 5

Identify asset vs liability/expense

vs investment 1 2 2 0 0 0 0 5

Mutual funds 0 0 0 0 0 1 0 1

Share market info 0 0 0 0 0 1 0 1

Page 25: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Interest rates

While ten organizations in the sample mention the concept of interest in their FLT, only seven of

them talk about simple and compound interest rates, six of them talk about flat and reducing interest

rates and one organization talks about fixed and floating interest rates. It must be mentioned here that

without addressing numeracy issues, expecting the audience to assimilate information about interest

rates and making calculations on products that they use is close to impossible14.

Table 14: Interest rates categories

Others Topics

The handful of topics mentioned in some modules in the sample is binned into this category.

Two organizations teach their audience to recognize different currency denominations. Four

organizations spend time helping their audience organize their documents like proof of address, photo

ID, financial product documents etc. and one organization talks to their audience about the PAN card,

the credit card, their uses and associated facts.

Table 15: Other Topics and Organizations

Interesting Other Topics Organizations

Currency Recognition Parinaam Foundation, Swadhaar FinAccess

PAN Card Sanchayan Society

Credit Card Sanchayan Society

Table 16: Other topics categories

14

Unpacking the Causal Chain of Financial Literacy (Carpena et.al); Sept. 2011

TopicsNBFC/

MFICBO Coop DO-MFI DO-P DO-F SHPI For All

Interest rates 2 2 2 1 1 1 1 10

Simple and compound interest 1 2 2 0 1 0 1 7

Flat and reducing interest rate 2 1 2 1 0 0 0 6

Fixed Vs Floating rates 0 0 0 0 0 1 0 1

TopicsNBFC/

MFICBO Coop DO-MFI DO-P DO-F SHPI For All

Other 1 1 2 2 0 1 0 7

Currency recognition 0 0 0 2 0 0 0 2

Organizing documents 1 1 2 0 0 0 0 4

Credit card 0 0 0 0 0 1 0 1

Pan card 0 0 0 0 0 1 0 1

Page 26: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Sankalp – The Resolution Sankalp – The Resolution is a 30-minute film created by Ujjivan, Lok Capital and Unitus to impart financial literacy among the MFI clients. It shows how two MFI customers fall into the trap of excessive borrowing and ghost lending (major reasons for the MFI crisis), and have to face the consequent dangers. In addition to that it also explains the concept and importance of a credit bureau, and the importance of building a positive credit history. This film is available in 10 Indian languages at free of cost. Over 600000 customers have already watched the film at dedicated screenings; additionally over 20 million general public has also been covered by cable television which telecast the film. The movie is setup in loan officer meeting environment

where the Zonal officer interacts with certain group

members about the traps they may face in borrowing

loan. The first 15-minute focuses on ghost lending

which shows how a couple is cheated by a friend who

leads them to borrowing money from an MFI for his

business in turn giving commission to the lady and her

group members which he later defaults and escapes.

The second 15-minute shows how a family gets into

trouble by excessively borrowing from different

microfinance companies and struggles with high

repayment. The movie setup, visualization and the

characters involved demonstrates real life situations

which makes it interesting, better to remember and

understand than any other standard communication.

This movie is sure to pass the message to all the MFI

clients very effectively.

Methods used All thirteen modules in the sample use the

classroom method of instruction as the basis and

include a few other activities and methods of

communication to increase the level of interest

and interaction. While almost all the modules use

flipcharts/posters as visual aids to guide the

audience through concepts, stories and group

discussions to better explain principles and

concepts, only a few modules include relevant

and interesting games that re-affirm the

principles taught in the session. Songs are

incorporated in four of the modules in this

sample.

Similarly, only a few modules use movies

as a method for instruction but this can be

due to the operational challenges of

screening movies in resource poor

environments. But there is a growing

acceptance that movies are a powerful

medium to communicate simple and life

changing principles to large groups of

people. The Sankalp video is one such

example.

The most interesting and possibly

worrying observation is that only four of

the thirteen modules conduct session

recaps in successive FLT sessions to jog the

memory of beneficiaries on what was

learnt in the previous sessions. This

method is a recognized method to help

audience remember new ideas better by

expecting them to recall information that

was taught to them. Four of the modules

conduct oral quizzes or written tests either

at the end of each session or end of the

Suryodaya, an MFI based out of

Maharashtra, uses an innovative way to

educate its clients on social and financial

issues. It chooses a topic (education of kids,

savings, health etc.) and develops a script for

the same. It is then recorded in local

language using an audio device. This

recorded message is played in the weekly

meeting of the client. This attracts more

attention of the beneficiaries and they retain

it for a longer time. The process keeps the

message standardized for all clients across

different states and can be adopted by

developers and implementers of Financial

Literacy Training Programmes.

Page 27: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

entire training to gauge the level of knowledge increase among the audience. Research15 has found that

tests can improve the attention span of training participants.

Table 17: Information on the different methods used by modules in the sample.

Interesting Methods Organizations

Songs Access Development Services, Accion

International, Reach India

Counselling Centres Sewa Bharat

Pack of Playing Cards Access Development Services

Developing Action Plan Access Development Services

Presentations Sanchayan Society

Helpline eCubeH Research Labs

Calculator Parinaam Foundation

Financial/ Budget

Diary

Parinaam Foundation and Swadhaar

FinAccess

Money Box Parinaam Foundation and Suryodaya

Savings Posters Swadhaar FinAccess

Table 18: Information on the different methods used by organizations

15

A.H. Johnstone, F. Percival, Attention Breaks in Lectures, Education in Chemistry, 13, 1976, 49

Organizations Stories Games Handouts/ Gifts

Samhita 4 1 0

Parinaam Foundation 13 1 4

Reach India 4 1 0

Mann Deshi 11 0 0

Accion/ PiP 5 6 0

ISMW/ SEWA 25 4 0

Sanchayan Society 1 1 Variable

Pradan 0 0 0

Trident 0 0 0

SKS 1 1 0

Access Development Services Variable Variable Variable

Swadhaar FinAccess 10 4 4

Page 28: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Chapter 5: Characteristics of FLT (number of sessions, length, TOT) Apart from the content module, a very important aspect of imparting training is the delivery mechanism

deployed. Even an interesting and useful information could become unappealing to the audience when

communicated in a tiresome and unacceptable manner. A judicious planning of the training in terms of

finalizing the number of sessions, duration of each session and methodology, thus becomes very

important for any training programme. It becomes all the more essential for the illiterate or partially

literate adults who find it difficult to associate any worth to such oratory lessons.

Among the various participating organizations, only two of the

organizations in the sample use a single session for their FLT/

induction program while one of the CBOs conducts a 2 day

long FLT program for their beneficiaries. Six of the remaining

organizations have five to seven sessions while the remaining

have three to four sessions for their FLT beneficiaries. Length

of these sessions most frequently are about an hour long, only

two programs are about eight and five hours each (CBO and

DO-P respectively), these are also the organizations that have

only one or two sessions in total for the training. There are

contradictory theories that organizations dealing with FLTs

believe in. While some believe that their beneficiaries prefer

to allocate one or two days entirely and therefore are more

likely to attend the FLT program if it is conducted as an intense

two day course, other organizations believe that it is better to spread the sessions across a few months

and ensure that each session is short enough to be able to fit into the beneficiaries busy schedules.

When beneficiaries are asked about their preference before designing some of the training

programs, they have reported that they would prefer it to be conducted in as few days as possible. It

therefore seems that intense 1-2 day FLT programs might draw the highest attendance. When

considering this from an educational point of view, providing financial information that can be dense

and completely new to some people who might not be accustomed to sitting for hours in a classroom

session could result in poor comprehension and even poorer recall. Studies16 do mention that an

average individual has an average attention span of ‘10-18 minutes’ and schools try to time their classes

around this number. It would seem that if knowledge gain and behavioral outcome were the desired

outcome, this aspect of financial education is taken into consideration.

16

A.H. Johnstone, F. Percival, Attention Breaks in Lectures, Education in Chemistry, 13, 1976, 49

ScheduleNumber of

SessionsDuration

2 days 2 7

Customized 4 3

weekly once 5 7

Customized 5 7

Customized 4 2

Customized 1 5

Customized 5

1 day 6 7

Customized 6 7

3 days 3 3

2 days 2 17.4

Flexible 4 2

Weekly during meeting 7 3.5

Flexible 4 2

weekly once 5 10

Customized 5 7

Customized 5 10

Table 19: Schedule of FLT sessions and total training

duration

Page 29: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Profile of Trainers

Trainers play a critical role in the delivery of the modules and can greatly influence the outcome

of the training. While looking at the trainers’ profile, we found some interesting facts. While some are

committed trainers, others are credit officers in the microfinance organizations and still others are

mature and accomplished members of the SHG federation. The rationale behind each of these strategies

does address one of the many issues that plague FLT programs around the world. Using a committed

trainer ensures that the program follows a regular schedule, standard method of training and more

qualified attention for the beneficiaries of the training program but this could have cost implications

that many organizations would not be willing to commit to.

Using existing staff from the organization, addresses the issues surrounding costs for

implementing FLT programs, but limits the scope of the program as it needs to be able to fit into an

employee’s already packed schedule. The employees don’t always have the qualities of a good trainer

and their workload might dilute their ability to train the audience on the various concepts. The

effectiveness of this model depends on how committed the organization is in providing high quality FL

training to their clients and realistic their goals for the program are. If the workload for the field officers

is not reduced in order to make time for FLT sessions, it would be very difficult to conduct these

sessions. Additionally, a few organizations in the sample were struggling with trying to communicate the

importance of their staff conducting FLT sessions, as the organization’s main mission is providing

financial services or helping build livelihood options etc. When mature and exceptional members of SHG

federations are used as trainers, the divide that could be caused by an outsider trying to teach people in

a community is bridged. But unless the trainers are remunerated sufficiently, or provided an adequate

incentive, this model might not work consistently across regions. In all the above models, systems need

to be set in place to monitor the progress of the training sessions, outcomes need to be tracked and

issues on the field need to be addressed on a regular basis for FLT programs to be provided consistently

and their content to remain relevant for the audience.

Constrained Modules

The modules that were provided to the researchers for the study were formatted in formats

that would be easy to read and follow. There were two modules that were difficult to follow for very

different reasons. One of the modules was entirely in a regional language and the organization was not

able to provide an English version. Due to lack of funds and shortage of time, the module could not be

translated into English and a very quick and dirty translation was requested of a native language

speaker. This was a huge draw back in the researcher’s ability to analyze the content of the module.

Aside from this issue, the lack of an English version is a hurdle in scalability of this module to other

regions as finding translators who are familiar with English and a regional language are more common

than two regional languages. The second module was formatted much like an essay, activities and

stories were not highlighted, objectives for sessions were not bulleted and there were no instructions

for the trainer. The entire module was very content heavy without many illustrations or activities to

break the monotony. From a trainer’s point of view, it was a very unwieldy manual.

Page 30: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Key Points

1. Some organizations have realized the

importance of reaching the youth

with financial literacy training

programme.

2. Institutions believe that

complementing financial literacy with

some livelihood programme would

increase the take up and influence of

the former.

3. High cost associated with the

implementation of financial literacy is

a common concern.

4. Debate on who should bear the cost

of implementation seems to have no

end.

Chapter 6: Management views and perception on FLT As mentioned in an earlier chapter, management interviews (Refer to Appendix A2) were conducted to

understand how the developers and implementers of training programmes perceive their success and to

know about their learning in the entire process. Only very few institutions arranged a visit to the

participant after the training to measure the impact of the programme but the methods used were not

very scientific in nature. Some organizations have, however, tried to measure the impact by conducting

tests before and after the trainings were conducted. With whatever crude methodology was used to

judge the impact, organizations seem to attribute the observation of increased savings, better cash

management etc. among the target community to their respective financial literacy training

programmes. All the participating organizations are satisfied by the observable outcomes but still feel

the need of a system that can give them some concrete and authentic indication of the success of their

programmes. Requirement of a system that assures standardization, monitoring and quality is also felt.

Managements have found the beneficiaries of these

programmes to be enthusiastic and loyal to the programme.

For them, the idea of accumulation of money is interesting

enough to catch their attention. In some cases,

beneficiaries, themselves, demand the explanation of some

financial concepts and products. This is really encouraging

for the organizations.

When asked about the best approach towards imparting

financial literacy, almost all opined that the programme

should be spontaneous and simple but should have a

defined methodology, especially when it is for the poor and

illiterate. The programme should be designed in a way that

people start raising questions and discussions. Interviewee

from Access Development Services said that school going

kids should be targeted as they are the ones who can

demand financial products from their parents and motivate

them to be aware of the financial concepts. Many felt that innovative and interactive methods like

screening movies in local language and skit create a better impact.

While suggesting the best approach, A few organizations strongly felt that Financial Literacy programs

should be complemented by a livelihood program as participants are then able to relate the training

with their real life with a better understanding of things. One of the learning from conducting these

programs is that it needs to cover topics for people from different settings and different communities,

and at the same time, it needs to be more tailored to heterogeneous needs of the clients. Also, the

topics should be presented in an organized and proper and logically sound sequential manner so that

beneficiaries can relate to the concepts. People should be told about the fraudulent schemes and about

the factors that they should consider before buying any financial product. Also, linking the customers to

the product that they are told about builds trust in the community and it becomes all the more

Page 31: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

important in case of low income groups as they have lesser sources of information and a very ill-

informed peer group.

All said and done, organizations are worried about the high cost associated with the development and

implementation of a financial literacy training programme. So, they feel that something should be done

in this regard by the government. Government officials, on the other hand, believe that the

responsibility of training the clients/ beneficiaries should be assumed by the organizations themselves as

imparting financial literacy helps the organizations as well, directly (by creating demand for more

products) or indirectly (by supporting them in their cause of addressing poverty).

Page 32: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Chapter 7: Client survey analysis17

The case of little response from the target population towards both the conventional and innovative

financial products in rural areas has received a lot of global attention. Literacy levels and more

importantly the lack of financial awareness have been held responsible for this phenomenon. And in

order to address this issue, numerous financial literacy training programmes have been designed, tested

and implemented using various methods and technological setups. Significant amount of research has

also been done to evaluate the effectiveness of these training programmes but their methodological

limitations and inconclusive results did not help the policymakers much to take a firm action plan. All

this muddled up landscape of financial literacy can be attributed to the lack of a universal definition of

the term that makes it difficult to tag an individual as “Financially Literate”. Although the need and

importance of financial education has been globally realized, there exists no benchmark to measure the

success of efforts that are put in to achieve it.

Each of the implementing agencies that are working in this realm of financial literacy develops the

training programme as per its own customized definition of the concept. Some focus on savings and

financial planning, others on numeracy along with these two and still others add banking and best

borrowing practices to the list. Customization is required but it ought to be done as per the actual need

of the target community and not according to implementer’s perception about it.

To understand beneficiaries’ perspective about training quality, delivery and management and

evaluating their current levels of financial knowledge and awareness we undertook a beneficiary survey

where the beneficiaries of 5 of the participating organizations were interviewed. Also an additional

sample of youth from 6th participating institution was interviewed which has been analysed separately in

this chapter because of the different characteristics they possess. The questionnaire for both these

samples was accordingly divided into three sections: 1. Training Delivery and Management, 2.

Beneficiaries’ Perspective, and 3. Knowledge and Application. First section asked them to list the topics

covered and material used in the training programme, mention the duration, venue and number of

participants and trainers. As part of the section on beneficiaries’ perspective, respondents were

primarily asked to evaluate the quality of training based on some specified parameters like topics

covered, methodology, material, venue, trainer, duration, usefulness etc. It also compared their self-

perceived sense of current financial capability with that they possessed before the training programme.

To test how the beneficiaries retain the knowledge that they acquired from the trainings an actual

financial capability of beneficiaries was then judged in the third section where they were asked

questions on numeracy, interest rates, budgeting, money management and financial products (Refer to

Appendix A3). Rest of the chapter presents overall findings from these surveys of (1) 100 people (20

from each of the five organizations) who are women belonging to an SHG or a JLG group. For institution

17 CMF conducted another study to measure the financial literacy levels in the country by interviewing

397 people across nine states. Refer to appendix A7 for the details of the study and its findings.

Page 33: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

wise responses to the questions asked, please refer to appendix A4 and (2) 36 youth trained by one

institution but associated with government schools, private schools, NGOs and colleges. For a category

wise tabulated response of youth, please refer to appendix A6.

Client Survey: Basic Findings

Training Delivery and Management

This section of the questionnaire (Refer to appendix A3) aimed at capturing the training mechanism as

was delivered to the respondents. Tables below, (7.1.1a, 7.1.1b, 7.1.1c and 7.1.1d) tabulate the

responses. The afternoon sessions seems to be most popular timing for delivering the FE followed by

morning sessions - 53 per cent of the participants were given training in the afternoon, while 36 per cent

received the training in the morning sessions. It seems that post-work sessions are still not very popular

(most likely due to the logistic issues) as very few FE sessions were delivered in the evening and at night.

Most of the providers deliver training sessions to a large group- around 68% of all sessions had more

than 20 attendees with 39 per cent of the trainees attended the training in a large group of more than

30 women.

Time of Training Participants (%)

Morning 36.00

Afternoon 53.00

Evening 4.00

Night 7.00

Time of Training

Group Size Participants (%)

Less than 10 6.00

10 to 15 17.00

15 to 20 9.00

20 to 30 29.00

30 and More 39.00

Number of Participants

Duration Participants (%)

Less than 1 hour 15.00

1 hour 25.00

1.5 hours 12.00

2 hours 35.00

More than 2 hours 14.00

Duration of each session

Table 7.1.1a Table 7.1.1b

Table 7.1.1c Table 7.1.1d

Methods Participants (%)

Stories/ Puppets 92.00

Posters 78.00

Group Discussions 73.00

Flip Charts 60.00

Movies/ Visual Aids 40.00

Handouts 31.00

Skits 26.00

Games 25.00

Methods Used for Training

Page 34: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Key Results

1. Afternoon is the most popular time for delivering sessions.

2. Sessions in general are delivered in large groups of 20 or more.

3. Most sessions, on an average, are conducted for more than 2 hours.

4. Stories/ Puppets and Posters seem to be the most commonly used methods of training.

Majority of the sessions stretched for over 2 hours on average,18 while only 15 per cent cases the

sessions were less than an hour of duration. Methods and equipment used to deliver the training ranged

from stories and skits to group discussions and movies or other visual aids. The most common ways used

are stories followed by posters and group discussions. The least popular methods are games and skits.

55 percent of the respondents visited a formal financial institution (a bank in most cases) for the first

time after the training programme and 15 per cent of the interviewees had not visited a formal financial

institution at all till the time of the interview.

Perceived Financial Capability

To find whether the training resulted in change in self perceived sense of knowledge of some important

parameters, respondents were asked to rate their comfort levels on some of the most commonly used

concepts (savings, borrowing, insurance, numeracy, household budgeting and cash-flow management in

business) related to financial literacy before and after the training (Refer to 2.13 to 2.18 of appendix A3).

The following table (7.1.2a) presents the percentage of people and their self-reported ability to handle

various subjects in pre and post FE training periods.

As can be depicted from the table (7.1.2a), the perceived level of capability of people has increased after

receiving the training across all the important segments of financial literacy but there has been a marked

improvement in the way people understand savings after the training. Only 21 per cent of women

interviewed used to save before the training but the percentage increased to 90 per cent after the

training. 68 per cent of people have started practicing the concepts of borrowing indicates that they

think that they know of all the available options of borrowing in the neighbourhood and are self-

sufficient in weighing them. Although the concept of insurance is complex, the percentage of people

having an insurance increased from 16 percent to 60 per cent. It is encouraging to know that people

maintain household budgets, if not using the financial diaries (that they were given during the training),

18

Information on the number of sessions could not be incorporated here because of many missing responses.

Before After Before After Before After Before After Before After Before After

Did not know anything about it 22.00 3.00 34.00 3.00 35.00 6.00 41.00 8.00 33.00 4.00 29.00 13.00

Knew about it but not how to do it 47.00 5.00 38.00 13.00 37.00 12.00 32.00 14.00 25.00 7.00 7.00 4.00

Knew about it and how to do it but did not practice it 10.00 2.00 11.00 16.00 12.00 22.00 10.00 11.00 26.00 10.00 6.00 8.00

Knew about it and practiced it 21.00 90.00 17.00 68.00 16.00 60.00 17.00 67.00 15.00 79.00 6.00 25.00

Cash Flow

Management in

BusinessComfort Level with the Subjects

Savings Borrowing Insurance Numeracy Household

Budgeting

Table 7.1.2a

Page 35: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

in some other way of their own. Only 50 per cent of the interviewees in the sample owned a business

and their ability, according to them, has also increased but not as much as in other areas.

Knowledge and Application

In this section, we would like to explore the knowledge retained by the beneficiaries with respect to the

important parameters such as numeracy, understanding interest rates, money management and

knowledge of basic financial products.

Numeracy

Most of the organizations that develop and implement the modules for financial literacy believe that

possessing basic numeracy skills is a prerequisite to understanding financial concepts. These

organizations have put in efforts to educate their clients on basic mathematics (refer to Chapter 6).

However, there are a few others who think that people need not be taught mathematics in financial

matters as they are smart and experienced enough to handle and manage money. Beneficiaries who

participated in the survey were given some imaginary situations (and not crude numbers) to understand

if they can do basic calculations (using numeracy skills or just by intuition). Each correct response to

questions 3.05 (addition and subtraction), 3.06 (division) and 3.07 (division) (Refer to appendix A3) was

given a score of one and a wrong answer a score of 0 and then we calculated total score obtained by the

respondents that ranges from 0 to 3.

Table 7.1.3a presents the percentage of respondents receiving the

score on a scale of 0 to 3, with 0 representing the case where

answer to none of the three questions was correct and 3

representing the a situation where the beneficiary answered all

the questions correctly. As can be depicted, a majority (87 per

cent) could answer all the three basic questions correctly and there

were no cases of all incorrect responses. The respondents might

not be good with calculations using crude numbers but they can

arrive at correct figures when asked in a form of a situation.

Understanding of Interest Rates

It is extremely important to understand interest rates, even if not

being able to calculate the exact number, for being able to decide

among the plethora of financial products. To understand this ability

of the respondents in sample, a question (3.10: Refer to Appendix

A3) was asked wherein they were asked to choose the best among

two given products based on different interest rates that they

offered. A correct answer to this question was awarded a score of 1 and a wrong answer was scored a 0.

As can be depicted from the adjacent table 7.1.3b, 62 per cent of women could respond correctly by

identifying the correct product and 37 per cent did not know the correct answer.

Scores Participants (%)

0 0

1 2

2 11

3 87

Numeracy

Scores Participants (%)

0 38

1 62

Interest Rates

Table 7.1.3b

Table 7.1.3a

Page 36: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Money Management

Being able to manage money in terms of being able to track cash flow and maintain a budget (mentally

or in books) is an important and expected outcome of financial literacy training programme. Money

management can lead to a drop in unnecessary expenses resulting in higher levels of savings. There

were two questions asked to judge how well respondents understood the principles of money

management. First was a simple short case of a vegetable vendor and respondents were asked to

suggest her ways of increasing her savings (Refer to 3.08 of Appendix A3). This was a level 1 question

which just required basic understanding of the concept. There were two possible responses to this

question. Respondents who gave both the answers were awarded a score of 2, those who could answer

any one of the two was given a score of 1 and those who did not know or gave a wrong answer were

scored a 0. Second question was a level 2 question and was more difficult. This question tested women

on their ability to allocate funds in a given scenario (Refer to 3.09 of Appendix A3). If responded

correctly, the maximum score that anyone could get on this case was 1. A 0 was given for a wrong

response.

Table 7.1.3c depicts the scores respondents received on the

aspect of Money Management. Even though a high percentage of

beneficiaries (73%) could correctly answer one of the two

questions in level 1, only 11% could answer both questions

correctly.

The poor performance of the respondents with money

management becomes even more obvious from the responses to

level 2 question. A predominant fraction of the respondents (84

per cent) prefer to save a lumpsum money at a low interest rate

as opposed to using that money to repay an existing expensive debt. This concept is very important for

people to understand as such a behavior forces people to borrow beyond their capacity and to remain

caught in the debt trap, but unfortunately, a vast majority of the respondents could not identify the

correct strategy with money management.

Knowledge of Formal Financial Products

Once financially literate, people are expected to understand

basic financial products and to make an informed choice to use

the ones that suit their requirements. Knowing about the

products is not sufficient for making an informed decision. One

should be aware of the best practices or of the ways that

maximize the economic payoffs. To determine if the trainees of

different financial literacy training programme were aware of

the financial products and best practices, they were given three

hypothetical situations (related to Savings and Insurance) where they had to weigh different options and

suggest appropriate products (Refer to 3.11, 3.12 and 3.13 of Appendix A3). A correct answer was

Scores Participants (%)

0 3

1 21

2 37

3 39

Financial Products

Scores Participants (%)

0 16

1 73

2 11

Scores Participants (%)

0 84

1 16

Money Management

Level 2

Level 1

Table 7.1.3d

Table 7.1.3c

Page 37: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

awarded a score of 1 and a wrong answer was given a 0. Table 7.1.3d present the overall scores on

knowledge of financial products attained by the sample interviewed. 39 per cent of the people could

answer all the three questions correctly. Subsections that follow present the findings for knowledge of

savings and insurance products separately.

Savings: Performance of the respondents on knowledge of Savings

products can be depicted from table 7.1.3e. The two questions

asked tested the understanding of basic savings products offered

by a bank or a post office. 46 per cent of the respondents could

answer both the questions correctly and 49 percent could score a 1

by answering just one of the two questions correctly.

Insurance: A simple question was asked to test respondents’

knowledge of insurance products. Interviewee was required to

suggest the type of insurance product that a person should opt for

in an imaginary situation. Table 7.1.3f shows that 71 per cent of

the people could give a correct response to the question asked

and 27 per cent gave a wrong answer. So this actually indicates

that the beneficiaries of financial literacy training are actually well aware of the concepts of insurance.

Perceived Financial Capability vs. Knowledge and Application

Having looked at the characteristics of the sample in earlier two sections by understanding their self-

reported ability to handle financial activities and their current knowledge and application levels, this

section now compares the two. It tabulates the range of scores obtained by the beneficiaries who

perceived to have understood and practiced different parameters that are considered to be critical

components of financial literacy.

Numeracy

Columns in Table 7.1.4a represent the distribution of

scores on numeracy skills of those who used to practice

numeracy (i.e. use numeracy skills in day to day activities)

after the training programme (67% of the entire sample)

and percentage of people who practiced numeracy after

the training programme. As can be seen from the table,

those who seemed to be comfortable with numeracy

after the training mostly achieved the highest possible

score of 3, indicating that a predominant majority of

those who felt comfortable after training actually seem to have achieved maximum score using their

retained knowledge.

Scores Participants (%)

0 5

1 49

2 46

Savings Products

Scores Participants (%)

0 27

1 71

Insurance Products

Scores Participants (%)

0 0.00

1 0.00

2 8.00

3 92.00

Numeracy of participants who practice it

Table 7.1.4a

Table 7.1.3f

Table 7.1.3e

Page 38: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Money Management

Tables 7.1.4b and 7.1.4c compare the self-reported

ability of the participants to use money management

principles with the score that they attained during

their interview. 15% of the respondents interviewed

were practicing money management principles even

before they received the training, 79% were

practicing after they received the training and 65%

were practicing only after the training programme

and not before it started. A huge gap can be inferred

in the perceived ability and actual ability of the

trainees among the respondents who thought that

they were managing their money well after the

training programme, only 14% could achieve a

maximum score of 2 in level 1.

This gap is more prominent in case of level 2 scoring. Although the percentage of people who perceive

that they can do money management well has increased after the training, a vast majority of them

(89%) actually could not answer the more complex question on money management.

Savings

21 per cent of respondents reported to have

saving and being aware of varied savings

products before the training. This percentage

increased after the training programme to 90

per cent. 69% of respondents were saving and

were aware of the savings products only after

the training programme and not before it

started. Table 7.1.4d presents the scores of

respondents from these three categories.

Correspondence of scores with the comfort

levels can be inferred from the table but trainees are yet to be strengthened on their knowledge and

awareness of savings products.

Borrowing

17 per cent of respondents reported

themselves to be able to weigh all the

borrowing options available in their

neighbourhood. This percentage increased to

68 per cent after the training programme. 51

per cent reported to be equipped with this

Before (15%) After (79%)After not

Before (65%)

0 0.00 16.46 20.00

1 93.33 69.62 64.62

2 6.67 13.92 15.38

Money Management of participants who practice it

Scores

(Level 1)

Participants (%)

Before (15%) After (79%)After not

Before (65%)

0 100.00 88.61 86.15

1 0.00 11.39 13.85

Money Management of participants who practice it

Scores

(Level 2)

Participants (%)

Before (21%) After (90%)After not

Before (69%)

0 4.76 3.33 2.90

1 38.10 45.56 47.83

2 57.14 51.11 49.28

Savings Knowledge of participants who practice it

Scores

Participants (%)

Before (17%) After (68%)After not

Before (51%)

0 17.65 32.35 37.25

1 82.35 67.65 62.75

Borrowing Knowledge of participants who practice it

Scores

Participants (%)

Table 7.1.4e

Table 7.1.4d

Table 7.1.4b

Table 7.1.4c

Page 39: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

ability only after the training programme and were not able to apply the concepts even if they knew

those before the training programme. Table 7.1.4e shows that 32.35% of women who, after being

trained, thought they were able to select the best available option failed to answer the question on loan

options correctly.

Insurance

Table 7.1.4f compares the scores on the

knowledge of insurance products with the self-

reported ability to understand the need and

relevance of insurance. 16% of the

respondents indicated that they were familiar

with the concept of insurance before the

training was conducted and had at least one

member of their household insured. Of the 60

percent people who understood the concept of insurance and had at least one member of their

household insured after the training programme, 22 percent don’t really seem to understand the

concept of it. The question asked was very basic in nature and didn’t involve the use of any technical

term like a premium or return. A more complex question would have likely increased the percentage of

incorrect responses.

These comparisons show that the majority of the beneficiaries who did not have pre-existing knowledge

and learnt a particular concept only from the FLT modules, have grasped the concepts quite well as a

large fraction of those (ranging from 49- 72% in questions excluding money management) have retained

their knowledge and answered the evaluation questions correctly.

Client Survey: Youth

A growing body of Research in Financial Literacy has recently focused on capturing the effect of financial

literacy programmes on different demographics. With inadequate evidence of successful financial

literacy training programmes, questions are raised on the efficacy of the programme implementation

and have made researchers think about customizing the financial literacy training programme for

different populations. Lusardi (2008), in her paper: “Financial Literacy: An Effective tool for informed

Consumer Choice” mentions that individuals are most prone to decision-making in specific time periods

like at the start of a new job that pushes people to think about saving, and suggests the importance of

exploiting such “teachable moments”. Based on findings from his study, he also recognizes the

importance of a training programme being able to cater to the differences among individuals, not only in

terms of preferences and economic circumstances but also of their existing levels of information,

financial sophistication, and ability to carry through with plans.

As part of the scoping study, a survey was conducted with youth as well to understand their levels of

Financial Literacy after they have received a training programme. Sanchayan Society, an organization

based out of Delhi, designs and conducts Financial Literacy Training programmes for youth studying in

government schools, private schools and colleges. They also collaborate with NGOs to train

Before (16%) After (60%)After not

Before (44%)

0 6.25 21.67 27.27

1 93.75 78.33 72.73

Insurance Knowledge of participants who practice it

Scores

Participants (%)

Table 7.1.4f

Page 40: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

disadvantaged youth. They customize their training module as per the requirement of target beneficiary

and is more focused on the formal financial products that youth is expected to use once employed. A

sample of 36 young students distributed across all these four segments was selected randomly and

interviewed. They were asked about the training programme they went through and their perspective

towards it. They were also tested and scored on their numeracy skills, money management behaviour

and understanding of financial concepts & their application (Refer to Appendix A5 for the questionnaire

and Appendix 6 for institution wise details). Remaining chapter presents the findings from this survey,

however, the findings could not be generalized as it is from a particular provider and as a result, may not

be representative of the universe.

Knowledge and Application

Numeracy

The section of young population that is getting an opportunity to get educated is expected to be able to

make calculated decisions as they are assumed to be more aware of the macroeconomic concepts like

inflation that affect one’s earnings and investments. 36 respondents of this survey were tested on their

numeracy skills (percentages and interest rates) that are required while deciding on a product among

others offered by the complex financial landscape. Three such questions were asked (Refer to 3.01, 3.02

and 3.04 of appendix A5). Students were given a score of 1 for every correct response and therefore, the

maximum score that anyone could attain was 3 and the minimum was 0.

Adjacent table 7.2.1a depicts the percentage of youth that obtained

different scores. Only a very small number of students could answer

all the three questions asked correctly. More than half of the

respondents could give correct answers to 2 of the three questions.

The commonality among these people is that they could work

correctly with percentages but could not apply this mathematics to

the financial products. Of the 36 students, 32 could give a correct

answer to the very basic question on numeracy but as the difficulty level increased, the number of

correct responses decreased to 25 (69.44%) and then to 3 (8.33 %).

Money Management Behaviour

Participants of the survey were given a list of

eight practices related to money management

and were asked how often they followed those

practices (Refer to 3.05 to 3.12 of appendix A5).

Adjacent table 7.2.2a gives the percentage of

youth that exhibit a good or poor money

management behaviour. First column in the

table lists the number of practices (out of 8) for

Practices Good MMB (%) Poor MMB (%)

0 0.00 5.56

1 0.00 36.11

2 5.56 33.33

3 19.44 19.44

4 44.44 2.78

5 22.22 2.78

6 8.33 0.00

Money Management Behaviour (MMB)

Scores Participants (%)

0 2.78

1 36.11

2 52.78

3 8.33

Numeracy

Table 7.2.2a

Table 7.2.1a

Page 41: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

which the corresponding rows and columns give the percentage of youth demonstrating a good or poor

money management behaviour.

As can be depicted from the tables, none of the participants practice a 100 per cent good management

behaviour. 30.55% of the youth follow more than half of the listed good practices. Approximately 24% of

the youth do not follow 3-5 good practices and most of these are associated with NGOs or Government

Schools in the sample. This can be attributed to their lack of awareness about financial products and to

their current economic condition where they would prefer liquidity of money at all times.

The table below (7.2.2b) gives the details on money management behaviour and shows which kind of

practices do youth tend to follow more and the practices which they find it difficult to relate to.

97.22 per cent of the youth carefully consider the affordability of an item before purchasing it and 75 %

of the people who do this also following more than 3 good money management practices. Among the

63.89% people who pay their bills on time, 55.56% also follow more than 3 good practices. 75% of the

youth who practice at least 2 good money management activities, find it more satisfying to spend

money than to save it for the long term. Respondents who are prepared to risk their money while

investing is very high.

Understanding of Financial Concepts

Another section in the questionnaire tested the respondents on their understanding of financial

concepts/ products. Four questions were asked in this section (Refer

to 3.15 to 3.18 of Appendix A5). Correct response was awarded a

score of 1 and a wrong response was given a score of 0. Therefore,

the final scores received by anyone could range between 0 and 4.

As can be depicted from the numbers in the table (7.2.3a), none of

the respondents could answer all the questions correctly. 22.22 per

cent answered 3 questions correctly. Most of the youth (38.89%)

could correctly respond to just one out of the four questions and

therefore got a total score of 1.

PracticesCheck

AffordabilityLive for Today

More Satisfied

to spend

Money

Pay Bills on

Time

Take risk while

Investing

Watch on

Financial

Affairs

Set Long Term

Financial Goals

Follow

Monthly

Budget

2 5.56 0.00 2.78 0.00 2.78 0.00 0.00 0.00

3 16.67 5.56 2.78 8.33 8.33 2.78 2.78 11.11

4 44.44 16.67 5.56 27.78 2.78 16.67 33.33 30.56

5 22.22 16.67 5.56 19.44 0.00 19.44 16.67 11.11

6 8.33 8.33 8.33 8.33 0.00 5.56 5.56 5.56

Total 97.22 47.22 25.00 63.89 13.89 44.44 58.33 58.33

Good Money Management Behaviour (Details)

Table 7.2.2b

Score Participants (%)

0 11.11

1 38.89

2 27.78

3 22.22

4 0

Understanding of Financial

Concepts

Table 7.2.3a

Page 42: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Application of Financial Concepts

To check how well the respondents can apply the financial concepts to live examples, they were given a

short case and were asked 5 questions based on the same (Refer to

3.19 to 3.23 of Appendix A5). Solving the questions required them

to apply mathematics to basic financial concepts/ terminology (like

provident fund, tax deductions etc.) that they are going to

encounter in near future. Minimum and maximum scores that any

respondent could receive were 0 and 5 respectively. Table 7.2.4a

gives the percentage of youth receiving a particular score.

38.89 per cent of the respondents answered all the five questions

correctly and 30.56 per cent could not give a correct answer to

more than 2 questions.

Understanding of Financial Products

Understanding of financial products (Savings and Insurance) of the

sample was tested using three questions (Refer to 3.03, 3.13 and

3.14 of appendix A5). The questions asked about the need of

insurance and properties of savings products. Scoring

methodology was as adopted in the earlier sections: a correct

response getting a 1 and a wrong response getting a 0. So, the

maximum possible score that could be attained on this parameter

was 3.

As can be seen from table 7.2.5a, 38.89 per cent of youth scored a total of 3 by answering all the

questions correctly and 8.33 per cent of respondents gave a wrong answer to all the three questions.

Score Participants (%)

0 5.56

1 11.11

2 13.89

3 13.89

4 16.67

5 38.89

Application of Financial

Concepts

Scores Participants (%)

0 8.33

1 27.78

2 25.00

3 38.89

Financial Products

Table 7.2.5a

Table 7.2.4a

Page 43: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Chapter 8: Government Initiatives

Financial Literacy and Credit Counselling Centres The broad objective of Financial Literacy and Counselling Centres (FLCCs) as outlined by Reserve Bank of

India (RBI)19 is to provide free financial literacy and credit counselling to people in rural and urban areas.

Specifically, these centres aim at educating people about the availability, use and benefits of various

financial products and services offered by the formal financial sector; they are also responsible for

offering credit counselling to the indebted individuals (to formal or informal financial sectors). Because

these FLCCs are associated with public and private banks, they can reach out to the maximum number

of people possible. In order to understand the functioning of these centres, they were planned to be

included in the scoping study.

Reaching out to FLCCs:

Despite having existed for over three years now, even as only a concept, researching about the current

status of FLCCs in various states of India was astonishingly difficult. To begin with, there was not much

information available online that could have been used to contact the concerned officials. Some of the

banks do mention FLCCs on their websites but in most of the cases, this information is either incorrect

or outdated; phone calls went unanswered during the mentioned working hours and in some extreme

cases the bank branch did not exist. After 2 months of constant effort, only one FLCC was identified,

located and interviewed. The following passage recounts this experience by comparing the ideal with

real world situations . The interview was conducted with the counsellor of Punjab National Bank’s FLCC

and later another interview with a professor at College of Agricultural Banking, Pune was conducted to

assimilate additional infomration.

Comparing ‘To be Achieved’ with ‘The Achieved’:

1. Organizational/ Administrative Set-up: The counselling centres are expected to maintain arms

length relationship with the associated bank and preferably not be located in the bank’s

premises. In cases where the bank premises are being used to minimize costs, the centres should

be kept separate and should not be perceived as a recovery or marketing agent of the bank. The

FLCC visited does meet this expectation but the relationship with the concerned bank is so

distant that bank officials are not aware of the centre situated 50 metres away from the bank

branch and are unable to guide anyone to that place.

2. Infrastructure: Banks are required to provide proper infrastructure to FLCCs with adequate

communication and networking facilities. Although, the physical infrastructure provided looks

good, it is not equipped with adequate communication facilities. Internet connectivity is poor

which definitely slows down the process of information gathering and dissemination.

3. Types of Credit Counselling: Banks may seek help of the counselling centres in preventing the

expected default by referring to them the cases where they can sense some warning signals. This

would make FLCCs provide some counselling to the consumer before his further financial

19

RBI Circular issued on February 4, 2009. (RBI/ 2008-09/371; RPCD.CO.MFFI.BC.No.86 /12.01.18/2008-09)

Page 44: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

deterioration. Banks seem to have neglected this aspect that can help them reduce the number

of defaults. They do not direct anyone to counselling centres and nor do they seek counsellors’

help in reaching out to expected defaulters to offer preventive counselling.

4. Mechanism for Credit Counselling and Debt Settlement: As mentioned above, banks could

encourage customers in distress to approach FLCCs that they have set up. FLCCs could conduct

some open-house seminars for group-counselling and they could also assist borrowers in

negotiating with the banks concerned. All three suggested mechanisms for Credit Counselling

and Debt Settlement can work only with some level of communication between different banks

and the FLCCs. Current communication gaps between the two is huge and it can be bridged only

if the efforts are made from both the parties.

5. Qualification and Training of Counsellors: Qualification of the counsellors is crucial to the

successful working of FLCCs. Counsellors are expected to disseminate the information that is

complete and correct. They are required to be qualified and trained enough to respond to any

query related to financial matters spontaneously. For the purpose of this, they should be trained

on a regular basis to keep them abreast with the latest developments in the banking sector and

to help them upgrade their skillset. Even though the counsellors appointed for the responsible

position are well qualified, they are not given any specialized training in counselling and debt

management. They do not have a document that guides them through their job description.

Counsellors, once appointed, are mostly left to themselves without any specific task list or

guidelines. They are responsible for updating and training themselves using any means or

resource.

6. Types of interface: Counselling centres are expected to be responsive and approachable. They

should be equipped to deal with requests received in person, by phone, posts, e-mails etc. They

should be having a toll-free number or some other easy ways that people can use to reach them.

As mentioned in the beginning of the chapter, counselling centres are difficult to reach out to.

Even if they exist, there are no easy ways to approach them. Communication is possible on a

single landline number or an email id but the calls and emails are hardly responded to. This

makes it difficult for the target population to avail the services when they need them and also

builds a bad rapport with people who start perceiving it as a laid back and irresponsible service

provider.

7. Monitoring: The functioning of FLCCs may be monitored by RBI and associated banks should be

updated on a monthly or quarterly basis. But no such systematic reporting and monitoring

system seems to be in place. There is no specific reporting format that the counsellors are

supposed to use. They send in a report (via email) in a self-created format to the concerned RBI

officials and none to the associated banks. These emails are not responded back to. In all, there

is no standardized process that is followed or that can be looked at to evaluate the progress and

quality.

Page 45: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

8. Publicity: Apart from educating and making people aware of various financial products and

schemes, emphasis must be laid on publicising the concept and scope of FLCCs. There is a

demand for counselling centres but it cannot be fulfilled by just providing a physical

infrastructure. It needs to be marketed well so that people know whom to look up to for a

financial advice. There are no guidelines on possible marketing strategies in whose absence

counsellors are devising their own ways (like putting up a hoarding in front of the centre, or

creating a facebook page) which are necessary but not sufficient.

College of Agricultural Banking: Financial Literacy (FL) Workshop & Training

Background

The College of Agricultural Banking (CAB) conducted a Train the Trainers Programme – Financial Literacy

Workshop for Resource Persons of KV Sangathan20 in November 2011. This program covered 75 teachers

from all states who were then responsible for teaching teachers and students in their respective states.

Objective

The objective of this workshop was two-fold. Firstly, CAB hoped to raise the demand for financial

services as officials realised that the provision of supply alone is often insufficient to achieve Financial

Inclusion.

Secondly, CAB hoped that regional offices of banks would see the success of the workshop and replicate

it in villages. In this way, Financial Literacy training could be further imparted to housewives, students

and individuals working in the unorganized sector.

Content

The workshop was broken up into four broad modules where participants were taught:

i. The philosophy and concepts of financial inclusion & literacy

Participants were introduced to the definition and importance of Financial Inclusion. In doing so,

trainers emphasised the importance of Financial Literacy, Education and hence the workshop itself.

Participants were also briefly introduced to the concept of Financial Planning and the need to set

financial life goals in order to achieve their dreams.

A separate section covered the movement towards ICT-based Financial Inclusion using Business

Correspondents (BCs)/Business Facilitators (BFs) and Biometric system in rural banking.

ii. Functions of Reserve Bank of India (RBI)

This section covered a brief history of RBI as well as its functions as a Central Reserve Bank.

Functions covered included: Currency management; Note & Coin Production; Currency Flows;

Foreign Exchange Flows; Exchange Rate Policy; Monetary Policy as well as unique RBI functions

20

KV Sangathans are central schools with total enrolment of 10,58,450 students and 49,286 employees on roll.

Page 46: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

such as Rural Credit. Each function was covered in minute detail. For example, under Payment

Systems, schemes such as Electronic Funds Transfer Scheme (EFTS); Real Time Gross Settlement

System and Electronic Clearing System were covered.

iii. A General Overview of Indian Banking and Financial System

Participants were introduced to the concept of the Financial System by comparison to the Human

Circulatory System. Following which, functions and key elements of a Financial System in general

were highlighted before introducing participants to India’s Financial System.

Special emphasis was placed on the Banking System. Participants were taught how to open bank

accounts and operate ATMs – knowledge that we often take for granted but which many individuals

might not have possession of. They were then taken through a list of financial services, products

(including the different types of Bank Accounts and Loans that an individual can take) and the

principles of safe banking.

Following this, participants were introduced to the concept of Investment and the channels through

which a retail investor can make investments. They were also introduced to the different Financial

Markets including the Stock, Money, Equity, Government Securities, Corporate Bond, Forex,

Commodities and Derivatives Market. Trainers also explained advanced Money Market Instruments

such as Repos, Collateralised Borrowing and Lending Obligation (CBLO) and Certificate of Deposits

(CDs).

iv. Financial Planning, savings and credit

Firstly, participants were taught the importance of prudent financial planning in meeting life goals

and/or life cycle needs. In particular, savings and compound interest were highlighted as the best

way to achieve these goals. To translate thought into action, participants were made to fill up Life

Goal Worksheets detailing the goals that they wanted to achieve. A simple Financial Calculator

Program was also offered to participants to facilitate easy financial planning.

Secondly, the concept of credit was introduced where participants were instructed upon the

relevant information that they should look out for when making a loan application. This included,

amongst others, Annual Percentage Rate (AOPR); Base Rate and Teaser Rates. Emphasis was placed

on the prudence and pitfalls of credit use.

Thirdly, participants were introduced to risk and two ways of managing it – Insurance and

Retirement Planning. For Insurance, an Insurance Decision worksheet was used to help participants

decide if they should take up Life Insurance.

Lastly, the workshop covered the avenues through which an individual could address their

grievances towards Insurance Companies and Banks. These avenues included Insurance

Ombudsman, Banking Ombudsman and Company Law Board regulation scheme.

Page 47: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Tailored programs for children and students

Besides the Financial Literacy Workshop itself, CAB also conducted 2 workshops tailored for children and

students.

The workshop “Banking for Kids” taught children the importance of savings and deposits using colourful

diagrams and pictures. For example, children were taken through a pictorial tour of a bank. Different

types of accounts, cheques and credit were also briefly explored.

Conversely, the workshop for students was structured around the theme of “Kaun Banega Crorepati

(Who Wants To Be A Millionaire)” and what one has to do to become a “Crorepati (Millionaire)”. In the

workshop, this involved understanding the concept of savings, compound interest, purchasing power

and inflation. To further reinforce concepts taught, students were taken through examples involving

simple math.

Challenges faced by CAB

Despite these efforts, CAB acknowledges that they continue to face significant challenges because of the

following reasons:

i. Any Financial Literacy (FL) program needs to be tailored for different target groups

ii. It is important to offer financial products along with FL

iii. It is difficult to measure FL in India as there is no proper definition of FL

In a bid to address these issues, CAB plans to build a portal/hub for Financial Literacy for organizations

to share their experiences, modules and in order to reach out to as many people as possible.

Page 48: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Chapter 9: Conclusions/recommendations/future research

The need and importance of financial literacy, especially for the low income population, has been

globally recognized and numerous efforts are being undertaken to provide this financial education,

primarily to low income people. This study was an effort towards identifying the programmes that are

being implemented across the country to achieve this end. There are indeed various modules of

financial literacy and the facilitators are equipped with numerous innovative ideas but there is very little

evidence of what really works in this realm.

This study, from its approach to understand the perspective of all the stakeholders (government

officials, MFIs, NGOs, other development oriented organizations and beneficiaries), identified the

challenges being faced by each of them and the ways they are trying to address those. Currently, some

of the organizations do have a comprehensive module developed but implementing it in the field is a

challenge with low levels of literacy and low ability to visualize the importance of varied financial

products in different stages of life cycle. So, this stands as a demand side issue which needs to be

addressed by devising an innovative delivery mechanism. From supply side, the concern is the way

institutions define financial literacy. For many of them, it is a very product centric approach, like an MFI

only tutors about the interest rates and customer protection and some others focus on the segments of

financial literacy relating to which they have a product to offer like pensions, insurance etc. The effect of

this methodology is promising in a way because people could then see the immediate effects of the

training and the product but it creates a negative impact as well. As most of the implementing

institutions feel, beneficiaries tend to take the other behavioural or attitudinal concepts very casually

and that is the reason why a behavioural change is rare to see as an impact of financial literacy training

programme.

While the FLT modules covered in the study are varied and in some cases comprehensive, an interaction

with beneficiaries highlight some prominent gaps. Even though, beneficiaries have started practicing

money management after the training programme, they couldn’t respond to the related questions in

the survey correctly. This might be because of a lack of required follow up with beneficiaries on this

topic. Although, the results show an improvement in beneficiaries’ numeracy levels, knowledge of

formal financial products and conceptual understanding of savings and borrowing, the percentage of

people attaining high scores is still very low. A progress on this front would require more effort and

initiative from the recipients’ side as given the monetary and logistical constraints, it is difficult to deliver

everything in all details; but the onus of motivating the beneficiaries and making them self-sufficient lies

with the implementing institutions that they are associated with.

In order to develop an effective tool for imparting financial literacy, it is very important for the

promoters of this concept to define it clearly. A possible definition of Financial Literacy could be: “A

multidimensional tool, with principle components of numeracy, money management and knowledge &

awareness of formal financial products, which inculcate financial discipline in beneficiaries and motivate

them to practice a behavior that helps them make financially sound decisions. The training programme

should be designed after a detailed need assessment of the target community. Trainers are required to

Page 49: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

be carefully selected and rigorously trained. The training of trainers manual needs be comprehensive

but reader friendly. It should have the objectives of each session listed down clearly. The structure

should be such that the process is clearly defined with activities, stories etc. properly highlighted. Also,

considering the attention span of adults, the entire programme should be evenly spaced out across

weeks or days as the need be. Variations using innovative methods (stories, movies, one act plays etc.)

are important to postpone or eliminate the occurrence of attention break. Involving the participants in

the training programme by asking them to develop their own financial plans or by giving them small

money boxes to save money in or by explaining them ways to save money by being a little careful in

their day to day activities, would really help as it would make people understand the importance of

being a part of the respective training programme.

With respect to the ideology of organizations, it is very important that they understand the purpose of

their programme and should conduct it as their responsibility. In most of the cases, the institutions fail

to understand that having an informed clientele will be benefitting them as well. An aware community

will understand the importance of being financially included and would increase the demand of financial

products. In case of borrowing products, an informed individual will tend to improve his/ her credit

history by repaying on time and by creating a strong asset base to help in case of emergency. It is time

that a common hub of Financial Literacy is developed where different institutions could share their ideas

and experiences so that an effective universal but adaptable framework could be designed that benefits

all, helps in the improvement of cost-benefit ratio and gives a direction to this mass campaign which is

otherwise, a non-scalable effort.

Page 50: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Chapter 10: Appendix

A1. Participating organizations list/ Content Analysis Grid

Sr. #Schedule

Number of

SessionsHours Topics Class size Status Self product

Stories/puppets Skits Flip charts/pic cardsMovies Posters Handout Group gamesGroup discussionOther 1 Other 2 Other 3 Were incentives provided

1 APMAS Andhra Pradesh Society/ CBP Received 2 days 2 7 3.5 Pilot complete 1 1 1 1 Format is designed in a manner that is difficult to implement for facilitator

2 Trident Microfinance Private Limited Andhra Pradesh NBFC Received 4 3 0.75 Ongoing 1

3

Samhita Community Development

Services Madhya Pradesh Trust Received weekly once 5 7 1.4 25 Scaling up to different regions0 1 1 1 1 Pre and post testgroup photoHome assignmentsCertificates

4 Swadhaar FinAccess Maharashtra

Section 25

Comp/ CBP Received 5 7 1.4 1 1 1 1 1 1 1 Certificate and contest of weekBudget diary+worksheetbank accountsRs. 30 fee

5 Partners in Prosperity (Accion) Uttarakhand Society NA 4 2 0.5 20 Only for UPP 0 1 1 1 1 1 1 Song

6 PRADAN Chhattisgarh Society/ CBP Received 1 5 5 1 1 1 1

7

Indian School of Microfinance for

Women Gujarat Trust/ CBP Received NA 5 0 0 1 1 1 1 1 1 Quiz at the end of session

8 Sewa Bharat (ISMW) Delhi

Society/ CBP/

Network Received 1 day 6 7 1.2 25-30 Plan to expand to all 100 Gender Resource Centres of Government of Delhi1 1 1 1 1 1 1 Writing boardsHave counselling centres where people can go and consultLunch

9 Sewa Bank (ISMW) Gujarat

Cooperative/

MFI/ Bank Received 6 7 1.2 1 1 1 1 1 1 1

12 SKS Andhra Pradesh NBFC NA 3 days 3 3 1 15 Does it with all the groups1 1 1 1

13 Access Development Services Orissa

Society/ BL/

Network Received 2 days 2 17.4 8.7 35 Ongoing in specified region1 1 1 1 1 1 Song (prayer?), pack of cardsParticipants develop Action planCertificate

16.1 Accion International - FLT Karnataka

Section 25

Comp Received Flexible 4 2 0.5 20 Ongoing 0 1 1 1 1 1 1 Song

17 Reach India West Bengal Received Weekly during meeting 7 3.5 0.5 1 shg group roll out in progress 1 1 1 1 1 Song No incentive

18

Sanghamithra Rural Financial Services

(Accion) Karnataka

Section 25

Comp/ MFI NA Flexible 4 2 0.5 20 Unsystematic 0 1 1 1 1 1 1 Song

19 Parinaam Foundation Karnataka

Section 25

Comp Received weekly once 5 10 2 40 Pilot completed 1 1 1 1 1 1 1 Calculator, fin. Diary, money box, certificateOpening savings accountOral test, refundable deposit, home assignment

23

ESAF Microfinance and Investments

Private Limited (ISMW) Kerala NBFC Received NA 5 7 1.4 0 1 1 1 1 1 1 Quiz at the end of session

24 Sanchayan Foundation Delhi Society Received 5 10 2 0 1 1 1 1 PPTs

25 Manndeshi Mahila sah. Bank Maharashtra Cooperative Received 0 1

Organization State NatureStatus of

Module

Page 51: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Content matrix 4 4 3 3 2 1 1

Topics Codes Samhita APMAS Parinaam Access dev Swadhaar Reach India Manndeshi Accion FLT PiP ISMW SanchayanPradhan Trident SKS SEWA SEWA bharatESAF Sangamitra Summary NBFC/MFICBO Coop DO-MFI DO-P DO-F SHPI

Savings 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 1 1 1 1 15 2 4 3 3 1 1 1

Diff savings goals 1 1 1 1 1 1 1 1 1 1 1 1 1 1 14 2 4 3 3 1 0 1

Savings discipline 0 1 1 1 1 1 1 1 1 1 1 1 1 1 13 2 4 3 3 0 1 0

Compare savings sources 1 1 1 1 1 1 1 1 1 1 10 1 2 3 2 1 0 1

Borrowing 2 1 1 1 1 1 0 1 1 1 1 1 1 1 1 1 1 1 1 17 4 3 3 3 2 1 1

Compare credit sources 1 1 1 1 1 1 1 1 1 1 1 11 1 2 3 2 2 0 1

Importance of repayment 1 1 1 1 1 1 1 1 1 1 1 1 12 2 2 3 2 2 0 1

Qs about loan characteristics 1 1 1 1 1 1 1 1 1 1 10 2 2 2 2 1 0 1

Credit bureau 1 1 2 1 0 0 1 0 0 0

Multiple borrowing and ghost lending 1 1 1 1 1 1 1 1 8 2 2 2 2 0 0 0

Good loan or bad loan 1 1 1 1 1 1 1 1 1 1 1 1 12 2 3 3 2 1 0 1

Repayment strategy (only interest vs

principal and interest repayments) 1 1 2 1 1 0 0 0 0 0

Repayment ability 1 1 1 1 1 1 1 1 8 3 2 2 1 0 0 0

Types of formal loans 1 1 0 0 0 0 0 1 0

Banking products 3 1 0 1 0 1 0 1 0 0 1 1 0 0 0 1 1 1 0 9 1 1 3 2 1 1 0

Savings options -pros and cons 1 1 1 1 1 1 1 7 1 1 2 2 1 0 0

Savings bank account info 1 1 1 1 4 0 0 0 2 1 1 0

Savings products info 1 1 1 1 1 1 1 1 8 1 1 3 2 0 1 0

Insurance 4 1 0 0 1 0 0 0 0 0 1 1 0 0 0 1 1 1 0 7 1 2 2 0 1 1 0

Basic terms and conditions 1 1 1 1 1 1 6 1 1 2 0 1 1 0

Types 1 1 1 1 1 1 6 1 2 2 0 1 0 0

Qs to ask before taking insurance 1 1 0 0 0 0 1 0 0

Pensions 5 1 0 0 0 0 0 0 0 0 1 0 0 0 1 1 1 0 5 1 1 2 0 1 0 0

Budgeting and planning 6 1 0 1 1 1 0 1 1 1 1 1 0 0 0 1 1 1 1 13 2 3 3 3 1 1 0

Types of expenses: short term, long

term, unexpected, expected 1 1 1 1 1 1 1 1 1 1 1 1 12 2 3 3 3 1 0 0

Financial plan and making a balance

sheet 1 1 1 1 1 1 1 1 1 1 1 1 12 2 3 2 3 1 1 0

Needs vs Wants 1 1 1 1 1 1 1 1 1 1 10 2 3 3 2 0 0 0

Financial diary 1 1 2 0 0 0 2 0 0 0

Inflation 1 1 1 1 1 5 1 1 2 1 0 0 0

Topics Codes Samhita APMAS Parinaam Access dev Swadhaar Reach India Manndeshi Accion FLT PiP ISMW SanchayanPradhan Trident SKS SEWA SEWA bharatESAF Sangamitra Summary NBFC/MFICBO Coop DO-MFI DO-P DO-F SHPI

Life cycle of events 1 1 1 1 4 1 1 2 0 0 0 0

Planned vs unplanned life 1 1 1 1 4 1 1 2 0 0 0 0

Numeracy 7 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 2 0 0 0

Using calculator 1 1 2 0 0 0 2 0 0 0

- +,-,/,* 1 1 2 0 0 0 2 0 0 0

Using games with real money 0 0 0 0 0 0 0 0

Investments 8 0 0 0 1 0 0 0 0 0 1 1 0 0 0 1 1 1 0 6 1 2 2 0 0 1 0

Ideas for investments 0 0 0 1 0 0 0 0 0 1 1 0 0 0 1 1 1 0 6 1 2 2 0 0 1 0

Secure investment options 0 0 0 1 0 0 0 0 0 1 0 0 0 0 1 1 1 0 5 1 2 2 0 0 0 0

Identify asset vs liability/expense vs

investment 0 0 0 1 0 0 0 0 0 1 0 0 0 0 1 1 1 0 5 1 2 2 0 0 0 0

Mutual funds 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0

Share market info 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0

Interest rates 9 1 1 0 1 1 0 0 0 0 1 1 0 0 1 1 1 1 0 10 2 2 2 1 1 1 1

Simple and compound interest 1 1 0 1 0 0 0 0 0 1 0 0 0 0 1 1 1 0 7 1 2 2 0 1 0 1

Flat and reducing interest rate 0 0 0 0 1 0 0 0 0 1 0 0 0 1 1 1 1 0 6 2 1 2 1 0 0 0

Fixed Vs Floating rates 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0

Other 10 0 0 1 0 1 0 0 0 0 1 1 0 0 0 1 1 1 0 7 1 1 2 2 0 1 0

Currency recognition 1 1 2 0 0 0 2 0 0 0

Organizing documents 1 1 1 1 4 1 1 2 0 0 0 0

Credit card 1 1 0 0 0 0 0 1 0

Pan card 1 1 0 0 0 0 0 1 0

Number of stories 4 13 10 4 11 5 5 25 1 0 0 1 25 25 5

Number of games 1 1 4 1 0 6 6 4 1 0 0 1 4 4 6

Number of handouts/gifts 0 4 4 0 0 0 0 0 0 0 0 0 0 0

Session recaps Yes Yes No Yes Yes No No No No No NA No No No No No

Samhita APMAS Parinaam Access dev Swadhaar Reach India Manndeshi Accion FLT Pip ISMW SanchayanPradan Trident SKS SEWA SEWA Summary

Page 52: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

A2. Questionnaire for Management

Study on Financial Literacy Training Programmes in India

I. Regions/ Districts covered:

II. About Module (Questions to be inserted after studying the respective module)

III. About Training Methodology

a) Who conducts the training programme with the beneficiaries?

b) How are these trainers selected/ What is their qualification?

c) How is the training of trainers conducted?

d) How is the training of beneficiaries planned (duration, location etc.)?

IV. About Participants and impact of training programme

a) Who all participated in the training programme?

b) Were the participants visited after the training programme was over to measure its impact?

c) What indicators were used to measure the impact?

d) How do you think your training programme has benefitted the participants?

e) Was the impact of training any different then what you had expected before implementing it?

How?

f) What do you think beneficiaries think about your training programme?

g) From your experience of planning and implementing the training programme, what do you think

is the best approach towards imparting Financial Literacy?

V. Future Plan

a) Are you planning to reach other areas with the same concept and module?

b) What kind of changes would you like to introduce in your present approach and module? Why?

Page 53: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

A3. Questionnaire for Client Survey

Evaluation of Financial Literacy Training Programmes in India

Beneficiary Survey

Identification

0.1 Unique Household ID

flksjdlkfsjdlkf

0.2 Name of the training organization

.

...............................................................

0.3 State Name

................................................................

0.4 District Name

................................................................

0.5 Block Name

................................................................

0.6 Panchayat Name

................................................................

0.7 Village/ Area Name

................................................................

0.8 Landmark

.........................................................................................

.........................................................................................

0.09 Street Number/ House Number [ ] [ ] [ ]

Page 54: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

0.10 GPS Reading North East

0.11.1 Respondent Contact

Mobile Number:

..........................................

Landline Number:

......................................

...

None/ NA -666 Skip to 0.13 -666 Skip to 0.13

Refused to Answer -777 -777

0.11.2 Does this number belong to the

Respondent?

Yes -----------------------

----------- 1

Yes ------------------

--------------1

No ------------------------

--------- 2

No -------------------

--------------2

0.12 Interviewer Name, Signature and Code

.......................................... [ ] [ ] [ ]

0.13 Name of the Respondent

..............................................

........................

0.14 Name of the Head of the Household ..............................................

........................

0.15.1 Start Time [ ] [ ] : [ ] [ ]

HR MN

0.15.2 End Time [ ] [ ] : [ ] [ ]

HR MN

0.16 Data Entry Operator Name, Signature and

Code

..............................................

............ [ ] [ ] [ ]

Page 55: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Introduction

Good ____________. My name is _____________. I am talking to you on behalf of Centre for

Microfinance, which is an independent research organization based in Chennai. I am here to talk to you

about any financial literacy training programmes that you attended. I will ask you some questions in this

regard. As any information you provide us will be kept confidential, your participation in this study will

not adversely affect you in any way. The results from this study however will orient future policy to

improve the lives of the rural people in India and your answers are instrumental in forming these results.

We hope that you will take part in this study. This interview will take about 15 minutes and you can stop

the interview or refuse to answer any of the questions if you want. If you have any questions about the

study or have grievances about how you were treated by our field staff, please feel free to contact our

superiors at this number 0522-4007249.

Would you like to participate in this study?

Yes

No Thank and terminate the survey

Page 56: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

I. Training Delivery and Management

S.No. Questions Options Skips

1.01 Have you ever participated in any kind of

Financial Literacy Training Program?

1. Yes 2. No

If 2 End

1.02 Where was this training held? 1. Any participant’s house 2. Any other closed area 3. In an open area 4. No fixed location

-777 Refused to Answer

1.03 What time of the day were these held? 1. Morning 2. Afternoon 3. Evening 4. Night

-777 Refused to Answer

1.04 How many sessions were held? [ ]

-777 Refused to Answer

-999 Do Not Know

1.05 How many people attended the sessions

usually?

[ ]

-777 Refused to Answer

-999 Do Not Know

1.06 How often did you attend the training sessions? 1. As and when it was scheduled 2. Whenever possible 3. Was not very interested

-777 Refused to Answer

Page 57: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

1.07 What was the approximate duration of each

session?

[ ] [ ] [ ] minutes

-777 Refused to Answer

-999 Do Not Know

1.08 Usually, how many people conducted a session?

[ ]

-777 Refused to Answer

-999 Do Not Know

1.09 What all was taught and discussed in these

sessions?

Interviewer Flag: Record Verbatim

1. ……………………….... 2. ………………………… 3. ………………………… 4. ………………………… 5. …………………………

1.10 What were the methods and tools used during

the training programme?

Interviewer Flag: Read all the options one by

one and circle all that apply. Ask for other

methods and tools and specify.

1. Stories/Puppets 2. Skits 3. Flip Charts 4. Movies/ other such visual aid 5. Posters 6. Handouts 7. Group Games 8. Group discussions

-888 Others, Specify

……………………………….

-777 Refused to Answer

Page 58: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

II. Beneficiary’s Perspective

S.No. Questions Options Skips

2.01 Did you like all the training sessions? 1. Yes 2. No

-777 Refused to Answer

If 2 2.03

2.02 What did you like the most?

Interviewer Flag: Record Verbatim

2.04

2.03 Why didn’t you like them?

Interviewer Flag: Record Verbatim

Page 59: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

What do you think about the following aspects of the training programme?

Aspect

1. Did you like

it?

1. Yes 2. No

-777 Refused

2. Would you like to

see any changes made

in it?

1. Yes 2. No

-777 Refused

If not 1 Next Row

3. What do you think should be changed?

Interviewer Flag: Record Verbatim

2.04 Topics

2.05 Materials/

Handouts/

FlipCharts etc.

2.06 Trainer

2.07 Training

Venue

2.08 Training

Timing and

Duration

2.09 Training

Methodology

2.10 Did you find the training programme useful? 1. Yes

2. No

-777 Refused to Answer

If not 1

2.12

2.11 How did you find it useful?

Interviewer Flag: Record verbatim

Page 60: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

2.12 How will you rank the overall training programme?

1. Very Good

2. Good

3. Indifferent

4. Bad

5. Very Bad

-777 Refused to Answer

-999 Do Not Know

Page 61: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

How comfortable were you with the following subjects before and after the training programme?

Interviewer Flag: Read aloud all the options and record one.

1. Did not know anything about it 2. Knew about it but not how to do it 3. Knew about it and how to do it but did not practice it 4. Knew about it and practiced it

-777 Refused to Answer

-999 Do Not Know

Subjects

Before After

1. Code

If not 4

3

2. How was it practiced 3. Code

If not 4

3

4. How was it practiced

2.13 Savings

2.14 Borrowing

2.15 Insurance

2.16 Numeracy

2.17 Household Budgeting

2.18 Cash Flow Management

in Business

Page 62: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

III. Knowledge and Application

S.No. Questions Options Skips

3.01 After training, did you visit any financial

institution for the first time?

1. Yes

2. No I have visited financial institutions

before

3. No I did not visit

-777 Refused to Answer

If not 1

3.04

3.02 Which one? 1. Bank

2. Post Office

-888 Others (Specify)

…………………………….

3.03 Why did you visit this financial institution?

Interviewer Flag: Read aloud all the options.

Circle all that apply.

1. To know about the products

2. To open an account

3. To deposit money

4. To withdraw money

-888 Others (Specify)

…………………………….

3.04 What, according to you, is the safest place to

keep your savings?

Interviewer Flag: Read aloud all the options.

Circle one.

1. At Home

2. With a friend or relative

3. Bank

4. Post Office

5. LIC

6. There is no safe place

-777 Refused to Answer

-888 Others (Specify)

…………………………….

-999 Do Not Know

Page 63: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Think about the following imaginary situations and answer the subsequent questions to the best of your knowledge.

3.05 Ram has 7 sweets. He gave 3 to his younger

brother and 1 to his friend. How many sweets

does Ram have now?

Interviewer Flag: Do not read the options.

1. Respondent gave the correct answer

of 3

2. Respondent gave incorrect answer

-999 Do Not Know

3.06 In a sale, a shop is selling all items at half price.

Before the sale, a chair costs 300 Rupees. How

much will it cost in the sale?

Interviewer Flag: Do not read the options.

1. Respondent gave the correct answer

of Rs. 150

2. Respondent gave incorrect answer

-999 Do Not Know

3.07 If 5 people all have the winning numbers in the

lottery and the prize is 1,000 Rupees, how

much will each of them get?

Interviewer Flag: Do not read the options.

1. Respondent gave the correct answer

of Rs. 200

2. Respondent gave incorrect answer

-999 Do Not Know

Page 64: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

3.08 Meera is a vegetable vendor. Her expenses are

more than her income. So she thinks that it is

impossible to save. What will you advise her to

change her opinion?

Interviewer Flag: Do not read the options.

Circle all that apply.

1. She should bring down her

unnecessary expenses on snacks, food

and other temptation goods that she

buys from outside.

2. She should save whatever small

amount she can on a regular basis.

3. Meera is right. It is impossible for her

to save.

-999 Do Not Know

3.09 Suppose you have Rs. 2000 to save. You can either save this in an account which earns 4% interest or repay an already existing loan of Rs. 2000 that charges 20 % interest. What will you choose to do with the 2000 rupees that you have got? Interviewer Flag: Read aloud all the options. Circle one.

1. I will save this money

2. I will repay my loan

-999 Do Not Know

3.10 Suppose you need to borrow Rs. 2000. Two

people offer you a loan. One loan requires you

pay back Rs. 2500 in one month. The second

loan also requires you pay back in one month,

Rs. 2000 plus 10 percent interest. Which loan

would you prefer?

1. One with a repayment of Rs. 2500

2. One with a repayment of 2000 plus 10

per cent interest

-999 Do Not Know

3.11 Vimla is a daily wage labourer with irregular

income. She wants to save money weekly and

draw whenever needed. What type of account

would you suggest her to open?

Interviewer Flag: Read aloud all the options. Circle one .

1. Passbook Savings Account

2. Recurring Deposit

3. Fixed Deposit

-999 Do Not Know

Page 65: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

3.12 Ramesh does plastering on tall buildings. It is a dangerous job

and he is worried that if he gets injured his family’s income will

become inadequate to meet their needs. If Ramesh comes to

you for advice what would you suggest?

Interviewer Flag: Read aloud all the options. Circle one.

1. Take up some other

(different) work

2. Purchase health/ life/

accident insurance

3. Increase savings

-999 Do Not Know

3.13 Seeta thinks that she cannot get an account opened in a bank

because she is illiterate. Do you agree with her?

1. Yes

2. No

-777 Refused to Answer

Page 66: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

A4. Tables of Findings for all institutions from Client Survey Following tables compare the scores achieved by respondents on each parameter (first column in blue)

with their self-reported ability to handle the financial activities associated with the parameter (blue row

below the names of the organizations). Ability is represented by alphabets: ‘a’ (did not know anything

about it), ‘b’ (knew about it but not how to do it), ‘c’ (knew about it and how to do it but did not practice

it), and ‘d’ (practiced it). First table for each parameter compares scores with ability before the training

programme and second table compares them with the ability after the training programme.

Numeracy

Money Management

a b c d a b c d a b c d a b c d a b c d a b c d

1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0 1 0 0 1

2 1 1 0 0 0 0 0 0 1 0 0 0 2 1 1 2 1 1 0 0 5 3 1 2

3 9 9 0 0 2 7 6 5 10 2 1 6 7 1 1 3 7 10 1 0 35 29 9 14

TotalSwadhaarScore

Access Development APMAS Parinaam Foundation EchubeH Research

a b c d a b c d a b c d a b c d a b c d a b c d

1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 1 1

2 0 0 0 2 0 0 0 0 0 0 0 1 0 1 2 3 1 1 0 0 1 2 2 6

3 0 0 0 18 0 0 3 17 1 0 0 18 0 1 4 7 6 11 1 0 7 12 8 60

ScoreAccess Development APMAS Parinaam Foundation EchubeH Research TotalSwadhaar

a b c d a b c d a b c d a b c d a b c d a b c d

0 0 2 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 2 0 0

1 5 3 1 0 0 1 2 0 0 0 0 0 4 0 2 0 2 5 0 0 11 9 5 0

2 2 5 1 0 3 1 11 2 5 5 1 7 5 0 2 1 4 2 3 4 19 13 18 14

3 0 1 0 0 0 0 0 0 0 0 1 1 3 0 2 0 0 0 0 0 3 1 3 1

TotalSwadhaarScore

Access Development APMAS Parinaam Foundation EchubeH Research

a b c d a b c d a b c d a b c d a b c d a b c d

0 0 0 0 2 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 2

1 0 0 0 9 0 0 1 2 0 0 0 0 0 0 0 6 2 4 1 0 2 4 2 17

2 0 0 0 8 1 0 5 11 1 1 0 16 0 0 1 7 0 2 1 10 2 3 7 52

3 0 0 0 1 0 0 0 0 0 0 0 2 0 0 0 5 0 0 0 0 0 0 0 8

TotalScore

Access Development APMAS Parinaam Foundation Swadhaar EchubeH Research

Page 67: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Understanding of Interest Rates

Knowledge of Financial Products and Best Practices

Savings

Insurance

a b c d a b c d a b c d a b c d a b c d a b c d

0 4 6 0 1 0 1 1 1 2 4 0 0 9 1 3 1 1 3 0 0 16 15 4 3

1 2 7 0 0 1 6 1 9 7 2 1 4 5 0 1 0 3 8 4 1 18 23 7 14

ScoreAccess Development APMAS Parinaam Foundation Swadhaar EchubeH Research Total

a b c d a b c d a b c d a b c d a b c d a b c d

0 0 0 0 11 0 0 0 3 0 0 0 6 1 1 10 2 1 3 0 0 2 4 10 22

1 0 0 0 9 0 1 0 16 0 0 0 14 0 1 4 1 1 7 2 6 1 9 6 46

TotalScore

Access Development APMAS Parinaam Foundation Swadhaar EchubeH Research

a b c d a b c d a b c d a b c d a b c d a b c d

0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 1 1 0 1 2 1 1 1

1 0 5 0 1 2 4 0 2 2 2 1 1 7 5 1 0 3 6 3 4 14 22 5 8

2 1 11 1 1 0 2 1 9 2 8 1 2 3 2 1 0 0 1 0 0 6 24 4 12

ScoreAccess Development APMAS Parinaam Foundation Swadhaar EchubeH Research Total

a b c d a b c d a b c d a b c d a b c d a b c d

0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 1 1 0 1 1 1 0 3

1 0 0 0 6 0 0 0 8 0 0 0 6 0 0 1 12 2 4 1 9 2 4 2 41

2 0 0 0 14 0 0 0 12 0 0 0 13 0 0 0 6 0 0 0 1 0 0 0 46

TotalScore

Access Development APMAS Parinaam Foundation Swadhaar EchubeH Research

a b c d a b c d a b c d a b c d a b c d a b c d

0 2 3 1 0 1 1 2 1 3 2 0 0 3 2 0 0 2 6 0 0 11 14 3 1

1 4 10 0 0 5 3 2 5 6 4 2 3 6 2 2 5 3 4 3 2 24 23 9 15

ScoreAccess Development APMAS Parinaam Foundation Swadhaar EchubeH Research Total

a b c d a b c d a b c d a b c d a b c d a b c d

0 0 0 0 6 0 0 0 5 1 0 2 2 0 1 4 0 2 6 0 0 3 7 6 13

1 0 0 0 14 0 1 2 12 1 2 2 10 0 0 7 8 2 2 5 3 3 5 16 47

TotalScore

Access Development APMAS Parinaam Foundation Swadhaar EchubeH Research

Page 68: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

A5. Questionnaire for Youth Survey

Evaluation of Financial Literacy Training Programmes in India

Beneficiary Survey

Identification

0.1 Unique Household ID

flksjdlkfsjdlkf

0.2 Name of the training organization

.

...............................................................

0.3 State Name

................................................................

0.4 District Name

................................................................

0.5 Block Name

................................................................

0.6 Panchayat Name

................................................................

0.7 Village/ Area Name

................................................................

0.8 Landmark

.........................................................................................

.........................................................................................

0.09 Street Number/ House Number

[ ] [ ] [ ]

0.10 GPS Reading North East

Page 69: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

0.11.1 Respondent Contact

Mobile Number:

..........................................

Landline Number:

......................................

...

None/ NA -666 Skip to 0.13 -666 Skip to 0.13

Refused to Answer -777 -777

0.11.2 Does this number belong to the

Respondent?

Yes -----------------------

----------- 1

Yes ------------------

--------------1

No ------------------------

--------- 2

No -------------------

--------------2

0.12 Interviewer Name, Signature and Code

.......................................... [ ] [ ] [ ]

0.13 Name of the Respondent

..............................................

........................

0.14 Name of the Head of the Household ..............................................

........................

0.15.1 Start Time [ ] [ ] : [ ] [ ]

HR MN

0.15.2 End Time [ ] [ ] : [ ] [ ]

HR MN

0.16 Data Entry Operator Name, Signature and

Code

..............................................

............ [ ] [ ] [ ]

Page 70: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Introduction

Good ____________. My name is _____________. I am talking to you on behalf of Centre for

Microfinance, which is an independent research organization based in Chennai. I am here to talk to you

about any financial literacy training programmes that you attended. I will ask you some questions in this

regard. As any information you provide us will be kept confidential, your participation in this study will

not adversely affect you in any way. The results from this study however will orient future policy to

improve the lives of the rural people in India and your answers are instrumental in forming these results.

We hope that you will take part in this study. This interview will take about 15 minutes and you can stop

the interview or refuse to answer any of the questions if you want. If you have any questions about the

study or have grievances about how you were treated by our field staff, please feel free to contact our

superiors at this number 0522-4007249.

Would you like to participate in this study?

Yes

No Thank and terminate the survey

Page 71: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

I. Training Delivery and Management

S.No. Questions Options Skips

1.01 Have you ever participated in any kind of

Financial Literacy Training Program?

3. Yes 4. No

If 2 End

1.02 Where was this training held? 5. Any participant’s house 6. In school/ NGO premises 7. Any other closed area 8. In an open area 9. No fixed location

-777 Refused to Answer

1.03 What time of the day were these held? 5. Morning 6. Afternoon 7. Evening 8. Night

-777 Refused to Answer

1.04 How many sessions were held? [ ]

-777 Refused to Answer

-999 Do Not Know

1.05 How many people attended the sessions

usually?

[ ]

-777 Refused to Answer

-999 Do Not Know

1.06 How often did you attend the training sessions? 4. As and when it was scheduled 5. Whenever possible 6. Was not very interested

-777 Refused to Answer

Page 72: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

1.07 What was the approximate duration of each

session?

[ ] [ ] [ ] minutes

-777 Refused to Answer

-999 Do Not Know

1.08 Usually, how many people conducted a session?

[ ]

-777 Refused to Answer

-999 Do Not Know

1.09 What all was taught and discussed in these

sessions?

Interviewer Flag: Record Verbatim

6. ……………………….... 7. ………………………… 8. ………………………… 9. ………………………… 10. …………………………

1.10 What were the methods and tools used during

the training programme?

Interviewer Flag: Read all the options one by

one and circle all that apply. Ask for other

methods and tools and specify.

9. Stories/Puppets 10. Skits 11. Flip Charts 12. Movies/ other such visual aid 13. Posters 14. Handouts 15. Group Games 16. Group discussions

-888 Others, Specify

……………………………….

-777 Refused to Answer

Page 73: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

II. Beneficiary’s Perspective

S.No. Questions Options Skips

2.01 Did you like all the training sessions? 3. Yes 4. No

-777 Refused to Answer

If 2 2.03

2.02 What did you like the most?

Interviewer Flag: Record Verbatim

2.04

2.03 Why didn’t you like them?

Interviewer Flag: Record Verbatim

Page 74: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

What do you think about the following aspects of the training programme?

Aspect

1. Did you like

it?

3. Yes 4. No

-777 Refused

2. Would you like to

see any changes made

in it?

3. Yes 4. No

-777 Refused

If not 1 Next Row

3. What do you think should be changed?

Interviewer Flag: Record Verbatim

2.04 Topics

2.05 Materials/

Handouts/

FlipCharts etc.

2.06 Trainer

2.07 Training

Venue

2.08 Training

Timing and

Duration

2.09 Training

Methodology

2.10 Did you find the training programme useful? 3. Yes

4. No

-777 Refused to Answer

If not 1

2.12

2.11 How did you find it useful?

Interviewer Flag: Record verbatim

Page 75: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

2.12 How will you rank the overall training programme?

6. Very Good

7. Good

8. Indifferent

9. Bad

10. Very Bad

-777 Refused to Answer

-999 Do Not Know

Page 76: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

How comfortable were you with the following subjects before and after the training programme?

Interviewer Flag: Read aloud all the options and record one.

5. Did not know anything about it 6. Knew about it but not how to do it 7. Knew about it and how to do it but did not practice it 8. Knew about it and practiced it

-777 Refused to Answer

-999 Do Not Know

Subjects

Before After

1. Code

If not 4

3

2. How was it practiced 3. Code

If not 4

3

4. How was it practiced

2.13 Savings

2.14 Borrowing

2.15 Insurance

2.16 Numeracy

2.17 Household Budgeting

2.18 Cash Flow Management

in Business

Page 77: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

III. Knowledge and Application

S.No. Questions Options Skips

3.01 Kapil is a furniture salesperson at a large

furniture store. He receives a monthly base

salary of Rs. 20,000 plus a ten-percent

commission on his sales. Last week there was a

sale at the store. Kapil’s sales for the weekend

brought his monthly total to Rs. 50,000. Kapil

wants to estimate his pay for the month. What

is the estimate?

1. Respondent gave the correct answer

of Rs. 25,000

2. Respondent gave a wrong answer

-999 Do not Know

3.02 Abhishek and Namita are the same age. At age

25 Namita began saving Rs. 1,00,000 a year

while Abhishek saved nothing. At age 50,

Abhishek realized that he needed money for

retirement and started saving Rs. 2,00,000 per

year while Namita kept saving her Rs. 1,00,000.

Now they are both 75 years old. Who has the

most money in his or her retirement account?

Interviewer Flag: Don’t read out the

options. Circle one.

1. They would each have the same amount because they put away exactly the same

2. Abhishek, because he saved more each year

3. Namita, because she has put away more money

4. Namita, because her money has grown for a longer time at compound interest

3.03 If each of the following persons had the same

amount of take home pay, who would need the

greatest amount of life insurance?

Interviewer Flag: Read aloud all the

1. An elderly retired man, with a wife who is also retired.

2. A young married man without children.

3. A young single woman with two

Page 78: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

options. Circle one.

young children.

4. A young single woman without children.

3.04 Imagine that the interest rate on your savings

account was 1 percent per year and inflation

was 2 percent per year. After one year, would

you be able to buy more than, exactly the same

as, or less than today with the money in this

account?

1. More than today

2. Exactly the same as today

3. Less than today

-999 Do not know

Page 79: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Following are some attitude and behavior statements (3.05-3.12). Please use a scale of 1 to 5 and circle the

number on it to show how much you agree or disagree that each of the statements applies to you, personally.

1 implies that you completely agree that the statement describes you and 5 shows that you completely

disagree:

Statements

Scale

3.05 Before I buy something I carefully consider

whether I can afford it. 1 2 3 4 5

3.06 I tend to live for today and let tomorrow

take care of itself. 1 2 3 4 5

3.07 I find it more satisfying to spend money

than to save it for the long term. 1 2 3 4 5

3.08 I pay my bills on time. 1 2 3 4 5

3.09 I am prepared to risk some of my own

money when saving or making an

investment.

1 2 3 4 5

3.10 I keep a close personal watch on my

financial affairs. 1 2 3 4 5

3.11 I set long term financial goals and strive to

achieve them. 1 2 3 4 5

3.12 I make a budget every month and follow it. 1 2 3 4 5

Page 80: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

S.No.

Questions

Options

Skips

3.13 If Neha has put aside money for emergencies,

in which of the following forms would it be of

LEAST benefit to her if she needed it right

away?

Interviewer Flag: Read aloud all the

options. Circle one.

1. Invested in a down payment on the house.

2. Stocks.

3. Savings account.

-999 Do not Know

3.14 If you had a savings account at a bank, which of

the following would be correct concerning the

interest that you would earn on this account?

Interviewer Flag: Read aloud all the

options. Circle all that apply.

1. Earnings from savings account interest may not be taxed.

2. Income tax may be charged on the interest if your income is high enough.

3. Sales tax may be charged on the interest that you earn.

4. You cannot earn interest until you pass your 18th birthday.

What do you think about the following statements (3.15-3.18). Circle true (T) or false (F) for each of them.

Statement Response

3.15 An investment with a high return is likely to be high risk. T F -999

3.16 High inflation means that the cost of living is increasing rapidly. T F -999

3.17 It is less likely that you will lose all of your money if you save it in more than

one place. T F -999

3.18 Buying a single company stock usually provides a safer return than a stock

mutual fund T F -999

Page 81: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

You found your first job working at Mc Donald’s. You are being paid on an hourly basis at the rate of Rs. 250 and you

have been contracted to work for 20 hours per week. You are paid every two weeks. As per your contract, whenever

paid, the company will withhold 2% of your pay in income tax, 1% in Provident Fund and Rs. 1,000 towards insurance

every 3 months. Answer the following questions (3.19-3.23):

3.19 What is your gross income for two weeks? 1. Respondent gave the correct answer

of Rs. 10,000

2. Respondent gave a wrong answer

-999 Do not Know

3.20 How much do you pay in income tax each time

you are paid?

1. Respondent gave the correct answer

of Rs. 200

2. Respondent gave a wrong answer

-999 Do not Know

3.21 What is your net income each pay period (2

weeks)?

1. Respondent gave the correct answer

of Rs. 9,700

2. Respondent gave a wrong answer

-999 Do not Know

3.22 At the end of 12 weeks, how much net income

will you earn?

1. Respondent gave the correct answer

of Rs. 57,200

2. Respondent gave a wrong answer

-999 Do not Know

3.23 How much income tax will you have paid by

the end of 12 weeks?

1. Respondent gave the correct answer

of Rs. 1,200

2. Respondent gave a wrong answer

-999 Do not Know

Page 82: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

A6. Category wise Tables of findings from Youth Survey

Numeracy

Adjacent table depicts the total

scores on numeracy received by the

percentage of respondents

associated with each academic

institution.

Figures below (Graph 1 and 2) graphically compare the numeracy scores attained by different groups

(based on gender and academic institution).

Money Management Behaviour

Tables below give the percentage of youth that exhibit a good or poor money management behaviour.

First column in both the tables lists the number of practices (out of 8) for which the corresponding rows

and columns give the percentage of youth demonstrating a good or poor money management

behaviour.

Graph 1 Graph 2

Practices College Govt. NGO Pvt. Total

0 2.78 2.78 0.00 0.00 5.56

1 16.67 5.56 0.00 13.89 36.11

2 8.33 0.00 16.67 8.33 33.33

3 2.78 5.56 5.56 5.56 19.44

4 0.00 2.78 0.00 0.00 2.78

5 0.00 0.00 2.78 0.00 2.78

Poor Money Management Behaviour

Male Female Male Female Male Female Male Female

0 0.00 9.09 0.00 0.00 0.00 0.00 0.00 0.00

1 0.00 45.45 16.67 0.00 0.00 22.22 10.00 40.00

2 0.00 27.27 33.33 33.33 0.00 77.78 10.00 40.00

3 9.09 9.09 16.67 0.00 0.00 0.00 0.00 0.00

Total 9.09 90.91 66.67 33.33 0.00 100.00 20.00 80.00

ScoreCollege (11) Govt. School (6) NGO (9) Pvt. School (10)

0.5

11

.52

me

an o

f sco

re_

num

era

cy

College Government School NGO Private School

01

23

me

an o

f sco

re_

num

era

cy

College Government School NGO Private School

Male Female Male Female Male Female Male Female

Practices College Govt. NGO Pvt. Total

2 2.78 2.78 0.00 0.00 5.56

3 2.78 5.56 8.33 2.78 19.44

4 8.33 5.56 13.89 16.67 44.44

5 11.11 2.78 2.78 5.56 22.22

6 5.56 0.00 0.00 2.78 8.33

Good Money Management Behaviour

Page 83: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

Understanding of Financial Concepts

Application of Financial Concepts

Following table gives the percentage of youth associated with each institution receiving a particular

score on application of financial concepts.

Score College Govt. NGO Pvt. Total

0 0.00 50.00 11.11 0.00 11.11

1 54.55 0.00 77.78 10.00 38.89

2 27.27 50.00 0.00 40.00 27.78

3 18.18 0.00 11.11 50.00 22.22

4 0.00 0.00 0.00 0.00 0.00

Total 100.00 100.00 100.00 100.00 100.00

Understanding of Financial Concepts

Score College Govt. NGO Pvt. Total

0 0.00 16.67 11.11 0.00 5.56

1 27.27 16.67 0.00 0.00 11.11

2 18.18 16.67 11.11 10.00 13.89

3 9.09 0.00 0.00 40.00 13.89

4 18.18 16.67 0.00 30.00 16.67

5 27.27 33.33 77.78 20.00 38.89

Total 100.00 100.00 100.00 100.00 100.00

Application of Financial Concepts

Page 84: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

A7. Measuring Financial Literacy: A Pan India Sample Survey The case of little response from the target population towards both the conventional and innovative

financial products in rural areas has received a lot of global attention. Literacy levels and more

importantly the lack of financial awareness have been held responsible for this phenomenon. And in

order to address this issue, numerous financial literacy training programmes have been designed, tested

and implemented using various methods and technological setups. Significant amount of research has

also been done to evaluate the effectiveness of these training programmes but their contrasting and

inconclusive results are hardly of any use to the policymakers. All this muddled up landscape of financial

literacy can be attributed to the lack of a universal definition of the term that makes it difficult to tag an

individual as “Financially Literate”. Although the need and importance of financial education has been

globally realized, there exists no benchmark to measure the success of efforts that are put in to achieve

it.

Each of the implementing agencies that are working in this realm of financial literacy develops the

training programme as per its own customized definition of the concept. Some focus on savings and

financial planning, others on numeracy along with these two and still others add banking and best

borrowing practices to the list. Customization is required but it ought to be done as per the actual need

of the target community and not according to implementer’s perception about it.

Clubbing all the assumed essential components together, CMF, as part of another study, attempted to

develop a tool to measure the perceived financial knowledge & capability and comfort with basic

formal financial services (financial literacy) of 397 people across nine states of the country.

Sample

Respondents were randomly selected from rural/ urban areas of each

state. In all, 37 per cent of the sample was rural in nature. 49.12 per cent

of the respondents were females and 90.15 per cent of the respondents

had not received any formal or informal training on Financial Literacy till

the date of interview.

Data Collection Instrument

Data was collected using a short questionnaire that first required the respondents to rate their financial

knowledge and financial capability as per their own perception. They were then given some hypothetical

situations to check if they do some necessary financial planning and to test their actual levels of

understanding of financial concepts and products. The scenarios varied from simple to complex

problems to gauge the exact degree of complexity that they can tackle with their current state of

awareness.

Findings

Results from the data collected have been presented in the following seven sections.

Rural Urban

Bihar Andhra Pradesh

Karnataka Gujarat

Orissa Maharashtra

Uttar Pradesh Tamil Nadu

West Bengal

Page 85: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

1. Perceived Financial Knowledge

As the graph 1 depicts, people in Maharashtra, Tamil

Nadu, Gujarat and Orissa rate their knowledge of

credit options in the neighbourhood the highest.

People in rural Karnataka report that they know very

little insurance and banking products, credit options

available to them and do not know at all about the

complex financial terms like equity investment.

Overall, people think that they are aware of the

credit options available to them. So, with this

information in hand, if an organization were to

develop a training programme, they should be

concentrating more on making people aware about the insurance products and should rush through the

information on credit options and banking products. The programme should be designed in a manner

that it focuses more on some aspects in some parts of some states as per the need assessment that can

be done this way.

2. Perceived Financial Capability

Graph 2 shows that people from Tamil Nadu who

were interviewed are most confident about their

financial capability. Across all the states people are

not very confident about their ability to manage the

unexpected financial shocks so the need is to

counsel them on the aspect of preparing for future

or saving for emergency and likewise, people who

are not confident about their family’s financial

stability should be guided on money management

principles.

3. Numeracy

People’s numeracy skills were tested using three different

questions one each on: percentages, division and

subtraction. Those who gave the correct answer to the

question were awarded a score of (+1), those who did not

know the answer were given a (0) and those who gave a

wrong answer were penalised with a score of (-1). Table 3 tabulates the percentage of sample that

obtained different scores on the questions asked. As can be seen, people are more comfortable

answering question on subtraction. 97.48% gave the correct answer to it. As the difficulty level

increased, the percentage of people giving correct responses decreased and it decreased drastically for

02

46

8

AP Bih Guj Karnat Maha Orissa TN UP WB

mean of Insurance mean of Investment

mean of Credit mean of Products

02

46

8

AP Bih Guj Karnat Maha Orissa TN UP WB

mean of Financial_Stability mean of Managing_Shock

mean of Aspirations

-1 0 1

Percentages 44.58 46.85 8.56

Division 4.28 4.28 91.44

Subtraction 1.76 0.76 97.48

NumeracyScores

Page 86: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

question on percentages (only 8.56% of

respondents gave a correct answer). Further,

chart 3 depicts the variation in the total score on

numeracy based on gender and location (rural or

urban) of the interviewees. Rural males have

performed better than their female counterparts

with a larger percentage of the former scoring

atleast (+2). However, percentage of rural males

scoring (0) and less than that is a little more than

the percentage of rural females scoring in that

range. In case of urban areas, the results are

opposite with a larger percentage of female respondents scoring equal to or more than (+2). Also, the

percentage of urban males, scoring a (0) or less is negligible as opposed to urban females for whom the

percentage of respondents scoring 0 or less is more than the remaining three segments of people.

4. Calculation and Understanding of Interest Rates

Being able to calculate or at least understand interest rates is very important in the complex financial

landscape. Considering this, people were given two questions: one in which they had to choose one of

the two borrowing products that had their interest rates differently defined; second question aimed at

testing their ability to understand the concept

of reducing purchasing power with increasing

inflation. Table 4 tabulates the percentage of

people who could respond to these questions

correctly and score a (+1), those who did not

know the answer to these questions (0) and

percentage of those who gave a wrong

answer and scored a (-1). As the table shows,

approximately 56 per cent of people

understand the interest rates and can

compare different scenarios based on just this

parameter. Chart 4 presents more detailed

information about the scores received by

people belonging to different categories (rural

or urban and male or female). Percentage of

respondents receiving a score of (+2) is

highest among rural males (51.4%). Most of

the urban sample has scored either answered

only one of the two questions correctly or has not answered any of the two questions. Percentage of

people obtaining a negative score is highest for urban females (22.4%).

0.03.21.64.0 38.4 48.8 4.0

0.00.00.00.8 64.8 24.0 10.4

0.00.01.35.2 41.6 48.1 3.9

1.40.01.44.3 35.7 38.6 18.6

0 20 40 60 80 100percent

Urban

Rural

Female

Male

Female

Male

-3 -2

-1 0

+1 +2

+3

-1 0 1

Comparing Loans 39.29 3.53 57.18

Purchasing Power 25.69 19.4 54.91

Interest RatesScores

11.2 11.2 44.0 14.4 19.2

7.2 9.6 44.8 9.6 28.8

9.1 10.4 33.8 7.8 39.0

8.6 4.3 24.3 11.4 51.4

0 20 40 60 80 100percent

Urban

Rural

Female

Male

Female

Male

Score:(-2) Score:(-1)

Score:(0) Score:(+1)

Score:(+2)

Page 87: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

5. Understanding Financial Products

Respondents were asked three questions to

judge their levels of understanding on the

Insurance (need), Investment (concept) and

Savings (awareness) products. Data collected

shows that 59.70 per cent people understand the

need of insurance product and only 19.90 per

cent of the respondents understand the concept

of ‘not storing all your eggs in one basket’

(investment). Most unfortunate finding was the

percentage of people who are aware about the

interest rate that one gets on a passbook savings

bank account. Only 1 out of 397 respondents

(0.25%) gave the correct answer, 66.25% did not know the answer and approximately 9 per cent said

that it was more than 7%. The chart 5 shows the gender based variation in the understanding of

financial products across rural and urban areas. None of the respondents could answer all the questions

correctly. Urban males have performed the best as 75.2% of them have scored atleast 1 point. Both

rural and urban females have scored better than rural males with 42.9% of rural males scoring zero out

of a maximum of three points that they could obtain.

6. Handling Financial Shocks

When asked for the ways people would combat a sudden financial shock, majority of them

(approximately 27%) said that they would use their savings for the purpose, proportion being same for

rural and urban respondents. The second most important source of funds for people in rural areas is a

loan from relatives or friends and a loan from money lenders for urban sample. Approximately 10 per

cent people, in both rural and urban areas, would borrow from banks and a meagre 6 per cent would

sell their assets in such a situation of financial loss. 5 %, all of them being rural inhabitants expect to get

a loan from an MFI or SHG in case of a crisis.

7. Financial Planning

To test if respondents and their households have

planned for their future, they were asked if they have

planned for their retirement, if they have more savings

than loans, if they have their lives insured and if they

plan their expenses. Data collected shows that only 13

per cent of the respondents have planned for their

retirement with majority of them residing in urban

areas. 54% to 58% of the respondents do the other

three mentioned ways of financial planning. Graph 7

was drawn from the scores (ranging from 0 to 4) that

interviewees received based on their responses. It shows the variation across states on the extent to

which people plan for the expected or unexpected financial expenses in future. As can be depicted from

0.5

11

.52

2.5

me

an

of fina

ncia

l_pla

nnin

g

AP Bih Guj Karnat Maha Orissa TN UP WB

31.2 56.8 12.0 0.0

24.8 59.2 16.0 0.0

40.3 48.1 11.7 0.0

42.9 47.1 10.00.0

0 20 40 60 80 100percent

Urban

Rural

Female

Male

Female

Male

mean of score_0 mean of score_1

mean of score_2 mean of score_3

Page 88: A Scoping Study of Financial Literacy Training Programmes ...ifmrlead.org/wp-content/uploads/2015/05/A Scoping Study of... · A Scoping Study of Financial Literacy Training Programmes

it, the mean score for none of the states is higher than 2.5 points (mean for Maharashtra) which clearly

shows a lack of good financial planning. Respondents from the states of Gujarat (urban), Karnataka

(rural) and Orissa (rural) perform the worst on planning with the state means being approximately equal

to 1 point. People in urban areas seem to plan more as compared to those residing in rural areas.

Among the states from which rural respondents were chosen, Uttar Pradesh has obtained the highest

mean score.

The choice of parameters or questions that have been used to measure the levels of financial literacy

among people can be questioned and argued upon. The objective of the study was to include all the

diverse aspects that various implementers think are important. This was an attempt to highlight the

need for a universal definition and the need of customized programmes as per the requirement of the

target community.

Given this level of variation, need of the sector is to clearly define financial literacy, at least the goals of

such a programme so that it can be designed effectively. After this is done, the onus lies with the

implementing agencies to categorize the target community based on the need assessment exercise that

they ought to conduct (may be similar to the one mentioned above) and then design and provide the

required customized intervention.