The regulator, stock exchanges and institutions need to do a lot more as financial literacy levels are very low in India.
At a NSE event to commence the World Investor Week, GP Garg, executive director, Securities and Exchange Board of India (Sebi), said, “In a country like India we have close to 80% literacy, but when it comes to financial literacy we are not that lucky. Last year, National Centre for Financial Education did a survey which says that only 27% of Indians are financially literate. It means that we have a long distance to travel and that puts a lot of responsibility on all the institutions including exchanges and Sebi that how best we take the message of financial literacy across the country.”
He said Sebi was undertaking various financial literacy initiatives through different channels. Sebi, along with other regulators such as the Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (Irdai) as well as Pension Fund Regulatory and Development Authority (PFRDA), has set up a National Centre for Financial Education which aims at educating Indians on basic areas such as the difference between saving and investing, the power of compounding, the time value of money as well as the importance of diversification, among others.
Garg said that a new programme called SMARTs was being kicked off soon for the purpose of educating investors. He said, “This year we are starting a new programme called SMARTs or Securities Market Trainers which will have specific training in areas of securities market which is free for the public. They have to simply write to Sebi and we will be happy to conduct the programme anywhere in the country.” Besides SMARTs, Sebi already uses investor associations across the country, special trainers in the commodities market and a large media campaign to educate investors.
In the end, the executive director said that not only does Sebi want an enhancement of knowledge but also that investors should write to Sebi if they have any issue with respect to the securities market.