fininclusion_ismw

8/6/2019 fininclusion_ismw

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Why Financial Literacy is

Important for Financial Inclusion

Indian School of Microfinance for Women


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Financial Inclusion seeks to:

Increase financial outreach to under-served and un-served populations.

Improve access at a reasonable cost to

these populations to a range of financial

services and products.


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Characteristics ofFinancial Exclusion

1.Lack of access to services/products

.

2. Lack of perception of the value ofavailing of formal services/products.

3. Lack of information and knowledge ofservices/products.

4. Inability to chose between alternateservices/products


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Formal institutions like banks seek to

address financial inclusion by:

Educating people about availableservices/products.- (financial education).

Reaching clients.

Being client friendly. Making access to no-frill accounts easy.

(as a beginning).


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There is a latent unmet demand for financial

service/products.

However there is also need to understand the

lives and constraints of the poor.

Poor have earning and spending patterns

that are peculiar to their state of poverty.

This in turn determines their savingspatterns.


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Financial Institutions have been more

successful in tapping latent demand when

they look through the eyes of the clients.Things that matter:

Who you are

Where you live

How you make your living


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Understanding the poor and their world of

work allows us to understand their earning

and expenditure patterns.

This understanding has been used to

create a curriculum of financial literacy

that combines reflection and introspection.


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What is financial literacy?

Awareness, knowledge and skillsto make decisions about savings,investments, borrowings and

expenditure in an informedmanner.


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CITIGROUP CENTRE FOR

FINANCIAL LITERACY

Indian School of Microfinance for Women


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Genesis.

Financial Literacy was initiated by SEWA

Bank in June 2002 Focused within Gujarat

ISMW started CCFL in 2005 with a

commitment to spread it across thecountry.


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Objectives

Spread awareness and build skills of

poor women on

Clarity of financial concepts. Making better financial decisions

Accessing financial products & services

Building assets Overcoming vulnerability

Planning towards economic security


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ApproachTNA with a prospective

partner mFIs

Campaigns with the

ultimate

beneficiaries

Concept Sharing

workshop

Monitoring and

Evaluation

Training of Trainers

Impact

Assessment


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Components

Concept Sharing Workshop and Campaigns

Training ofTrainers (ToT)

Research


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Fundamentals of Financial Planning

Life-cycle needs Financial Decisions

Components of

Financial Planning

Planner V/s Non-Planner

Current Status V/s

Planned Status

Cash Dealing toManaging Finances


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Mature Borrowings

When-How and Why

we borrow; fromWhom

Pre and Post

Borrowing Factors

Reducing vs. FlatRate of Interest

Borrowing for

Productive purpose Options available

for borrowings

How much debt

should one take


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Smart Savings

How to Save Concepts in

Savings

Saver V/s Spender

Deciding your goals

Relationship

between

income/expense and

savings


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Wise Spending

Define

consumption: Needvs. Want

Avoid wants and

spend judiciously

on needs

Managing Big-Ticket

Expenses Creating a Need

Account


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Intelligent Investments

Financial

Independence Make a Financial

Plan

Make a Budget

Keep Investing

Mitigate Risk Capital Formation


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A Glimpse of the Activities so far


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Financial Literacy Workshops &

Campaign

Date Name of

MFIs/Organizations

State/Region No of

Participants

in the

workshop

No of

Participants

in the

Campaign

2nd February

2004SEWA Bank Gujarat,

Ahmedabad.

58 -

4th -6th

January 2006Chaitanya Maharashtra,

Pune

40 800

1st 3rd

February2006

SEWA Indore Madhya

Pradesh,Indore

23 350

1st 3rd

March 2006Centre for Youth and

Social Development

Orrisa 33 350

4th 6th April

2006

Bullock Workers

DevelopmentA ciati n

Tamil Nadu,

Pondicherry

46 1000


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Conti

31st May-

2nd June

2006

Ankuram Sangamam

Poram

Andra

Pradesh,

Hyderabad

30 100

6th 8th

July 2006

Sarba Shanti

Ayog(SASHA)

West Bengal,

Kolkata

30 100

21st June

2007

Campaign on Financial

Literacy.

Gujarat,

Ahmedabad

- 1500

28th July

2007

Shephard Tamil Nadu,

Trichy

- 500

10th

September

2007

Village Welfare Society Kolkata - 300

16th 18th

October

2007

Access Development

Services.

Madhya

Pradesh:

Bhopal, Gwalior

- 100


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Training of Trainers (TOT)

Date Name of

MFIs/Organizations

represented

State/Region

(location of

TOT)

No of

Participants in

the TOT

5th 10th

December 2005

1.SWADHAAR

2.CYSD

3.SKS

4.Chaitanya

5.BWDA

6.SEWA Indore

7.SEWA Bank

8.SEWA Bharat

9.FPI

Gujarat,

Ahmedabad

17(from seven

states)

19th 22nd May

2006

Refresher training for

Chaitanya

Gujarat,

Ahmedabad

11

25th 26th July

2006

Loyalam Bank Project Manipur 30


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Conti

19th to 27th

February 2007

1.Development support team,

Pune.

2.SHEPHARD

3.Village Welfare Society

4.Chaitanya

5.Annapurna Parivar6.SWABHIMAAN

7.Grameen Koota

8.BISWA

9.SEWA Bank

Gujarat,

Ahmedabad

16

29th July 2007 Shephard Tamil Nadu,

Trichy

70

11th 12th

September

2007

Village Welfare Society

(VWS)

Kolkata 18


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Financial literacy can lead to financial

wisdom

Ability to manage money not justdeal with it.

Ability to use skills to take wisedecisions for the future


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A financially literate person canlink her need for a product orservice with those available within

the banking system.

A demand for financial inclusion

is created through an appreciationfor what is available.


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The formal banking system will find afinancially literate person easier toapproach.

A financially literate person will seekinformation about available services to

operationalise her financial decisionsand hence access what is available.


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Financial literacy empowers the poor

and women

Financial literacy builds capacitiesto make decisions and take

responsibility for those decisions.

It increases their economic space.


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Conclusion

Financial literacy is a primary step for

financial inclusion since introspection

changes behavior which in turn makes

people seek and receive financial servicesand products.


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THANK YOU

fininclusion_ismw

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