REDUCING FINANCIAL VULNERABILITIES FROM CHILDHOOD
Financial inclusion, financial consumer protection, and financial education work in tandem to reduce financial vulnerabilities. This can be achieved most effectively by ensuring that children and young people develop positive financial attitudes and behaviours and have a thorough understanding of basic financial matters from a young age. This session looked at practical examples of providing financial education to children and young people. Issues were taken up and deliberated as to what more can be done to ensure that today’s youth are financially resilient in adulthood.For this,
• Dr Adele Atkinson, Head of Financial Education, OECD, was the moderator of the session. The three panelists of the session were:
• Dr Gunakar Bhatta, Executive Director of Nepal Rasta Bank, Nepal, and also the Board Member of SEBON
• Mr Hariharan Neelakanta Iyer, Chief General Manager, Office of Investor Assistance and Education, Securities and Exchange Board of India
• Dr Lillian Koh Noi Keng, CEO, Fintech Academy, Singapore
Dr Adele Atkinson, Head of Financial Education, OECD
1. Dr Gunakar Bhatta, Executive Director of Nepal Rasta Bank, Nepal, Board Member of SEBON
2. Mr Hariharan NeelakantaIyer, Chief General Manager, Office of Investor Assistance and Education, Securities and Exchange Board of India, India
3. Dr Lillian Koh Noi Keng, CEO, Fintech Academy, Singapore
The first panellist of Session 3 was Dr Gunakar Bhatta, Executive Director of Nepal Rastra Bank, Central Bank of Nepal. His presentation mainly focused on the background of financial vulnerability, provisions available in Nepal to mitigate such vulnerabilities, and course of action taken by Government and Central Bank of Nepal. Dr Bhatta elucidated that financial vulnerability is a state of financial instability or a situation to the exposure of financial risk and shock. It usually emerged in the absence of financial access, financial inclusion, and financial literacy.
He added that it could also be caused by inadequate income, imbalance of income and expenditure, income inequality, and low resilient capacity. He elaborated that long term stability, social safety net, financial education, and planning reduced financial vulnerability.
He also explained about the measures taken by the State to improve financial vulnerability and the future action planned for achieving the same. He explained how all the banking provisions of Nepal Rastra Bank were directed to improve financial inclusion. For instance, all commercial banks have been mandated to have branches in all the 753 local bodies across the country. He shared that as of mid-April 2019, an additional five branches got opened in a day which meant that additional 27.4 percent branches to the existing branches were opened in 10 months of current fiscal year. Also, data showed that commercial banks opened branches in 457 local levels in the last 22 months alone.
Sharing details on demographics, Dr Bhatta added that the share of population under 15 was decreasing over the years having its own implications on future labor force. He further explained that in order to offset the impact of such decrease, there is a greater need to focus on quality of life which has close linkages to financial sector as well.
Dr Bhatta elaborated various provisions taken by Government and Nepal Rastra Bank (NRB) regarding financial inclusion. Some of the government initiatives included:
• All citizens to have access to social security covering their lifecycle
• A campaign for all Nepali to have bank account
• Health insurance for family
• Rights of licensing cooperatives given to Local Bodies for around 35,000 cooperatives. Some of the NRB’s efforts made on Financial Inclusion were:
• Deprived and priority sector lending,
• Subsidised loans to women and their entrepreneurship,
• Expansion of branches,
• Refinancing facility for inclusive development,
• Micro credit programmes mainly for unbanked people
• Priority towards technology-based innovative financial products like mobile and branchless banking.
• NRB is an active member in the Alliance for Financial Inclusion (AFI),
• NRB committed to the Maya Declaration 2013,
• Campaign of opening bank accounts of all Nepali,
• BFIs have offered several types of deposit products like balbachat, ketaketibachat, mahilabachat, grihanibachat,
• Campaign of opening commercial bank branches in all 753 Local Bodies,
• Social security allowances distribution through bank accounts only,
• Access to insurance has increased by 18 percent.
Additionally, financial literacy programme is being carried through the audiovisual and print media such as NRB with the Student and 'Paisa ko boat' (Money Tree). Additionally, BFIs must run some kind of financial literacy programme. Also, BFIs should encourage advertisements and notices targeted to increase financial literacy. NRB exemployee union also worked for financial literacy in addition to the many campaigns by different organisations for promoting financial literacy. Towards the end of the presentation, Dr Bhatta shared about financial consumer protection.
For Financial Consumer Protection, there is the provision of 'Information and grievance handling Desk' at each Bank and Financial institutions. Additionally, there is a special provision of dedicated hotline and online compliant filing. Bank and financial institutions need to keep transaction of consumers confidential. Alongside, information about financial services and products and their terms and conditions are expected to be disseminated in simple and clear way. He added there is right to obtain information about their transactions free of cost. Customers are to be notified whenever any changes in the terms and conditions occurred. Deposit insurance (up to Rs. 300,000) and guidelines on service charges and no pre-payment charge on loans repayment (up to Rs. 5 million) were some other policy directives introduced for financial consumer protection. Concluding his presentation, Dr Bhatta shared some of future action plans that need to be done to improve the present status of the country regarding all the pillars of financial stability, financial education, financial inclusion and financial consumer protection.
The second panelist was Mr Hariharan Nilkantha Iyer, Chief General Manager, Office of Investor Assistance and Education, Securities and Exchange Board of India, India. Mr Iyer presented about 'Financial Education for Children—the Indian experience’. Mr Iyer started off his presentation by citing some data related to demographics of India. An emerging economy with a population of 121.1 crores, the population in age bracket 0—14 is 372 million while the population in the age group 0—20 is 521 million with male members constituting 52 percent and females constituting 48 percent. He presented some important statistical figures such as the following:
• Child workers constitute 10.1 million (3.9 percent of total child population).
• Literacy Rate among children between 5-14 years is 75.7 percent
• Incidence of children engaging as a part of the workforce has decreased in India by 2.6 million (1 percent of total child population) between 2001 and 2011.
• Average annual drop-out rate from (FY2012-13 to FY2014-15) has decreased in primary schools while mild increase in upper primary/ secondary schools.
He considered that the greatest achievement for Securities and Exchange Board of India (SEBI) has been the introduction of 'Resource Person' programme. Since its inception, SEBI has been able to empanel resource persons and conduct 36, 353 programme for school children and young investors till March 31st 2018. SEBI has also conducted financial education awareness programmes for different target groups viz., home makers, self-help groups, executives, middle income groups, and retired personnel. Apart from this, college students, under graduate/graduate/post graduate students visit SEBI offices. Also, SEBI officers visit different educational institutions for conducting financial awareness seminars.
Sessions are conducted on financial literacy, the working of capital market, caution against ponzi schemes, etc. SEBI also conducted 'Visit to SEBI' programme under which a total of 2,693 visits to SEBI programmes have been conducted covering over 110,000 participants till May 31, 2019. Mr Iyer also shared about “National Strategy on Financial Education” with vision to make “A financially aware and Empowered India”. This was developed under the aegis of the Sub Committee of the Financial Stability and Development Council (FSDC) and to be administered by National Centre of Financial Education (NCFE). This is running as a joint venture of financial market regulators like SEBI, RBI, IRDA, and PFRDA with the aim to create awareness and educating consumers 28 Conference And Roundtable On Financial Consumer Protection And Education In Asia-Pacific on (i) access to financial services, (ii) availability of various types of products and their features; (iii) changing attitudes to translate knowledge into responsible financial behaviour; (iv) making financial services consumers understand their rights and obligations; and (v) including financial education in school curriculum.
Mr Iyer also shared about National Centre of Financial Education (NCFE) which was set up in 2018 as a separate, not for profit entity to implement the objectives of National Strategy of Financial Education (NSFE). This national level strategy was promoted by the joint venture of financial market regulators like SEBI, RBI, IRDA, and PFRDA with the theme to create awareness and educating consumers on access to financial services, availability of various types of products and their features. NCFE in particular has put forward four different programmes to enhance financial education in the country namely:
• FE in school curriculum,
• National Financial Literacy Assessment Test (NFLAT),
• Money Smart School Programme (MSSP), and
• Financial Education Training Programme (FETP).
National Financial Literacy Assessment Test (NFLAT) is a free annual financial literacy test for school students of Class VI to XII. Since its initial launch, as many as 8.87 lakh students from 5000 schools across the country have participated in NFLAT. It aims to provide basic financial skills that are necessary to make informed and effective financial decisions throughout each stage of their lives.
Money Smart School Programme (MSSP): It is a programme which teaches students of Class VII to X topics from financial education workbooks. Out of the 400 schools registered for programme, 266 schools implemented this programme. It also has developed videos based on the workbooks and made available the necessary training for teachers working in schools. Financial Education Training Programme (FETP): It is the programme to train the school teachers in the area of financial education. FETP was launched in the year 2015-16, and NCFE has conducted 56 programmes and trained 3559 teachers since then.
Towards the end of his presentation, Mr Iyer discussed the challenges and way forward. He explained that financial literacy programmes are designed to cover a wide population spread over varied regions, especially rural areas. Hence, teachers of the financial education programmes need to be well versed with the concepts. He mentioned that the cultural and language differences in population of different areas as one of challenges.
He shared that there is greater need to cover those who are not in formal education system or those dropping out of the educational institutions. He further added that identifying and bringing the scattered target groups is very difficult. As a way forward, he suggested that increasing efforts for inclusion of financial education in school curriculum, providing more training for teachers, and increased use of digital methods for spreading financial education among children (e.g., NFLAT), mobile phones, etc. (e.g., GIF files) could be some of the potential ways to promote financial education among young people.
The third panelist was Dr Lillian Koh Noi Keng, CEO, Fintech Academy, Singapore. Dr Keng also is the Director for Center for Research and Innovation NTUitive, a spin-off of the Nanyang Technological University (NTU). She is also the Advisor, NTU-Investment Interactive Club and also the Advisor, Singapore Digital Chamber of Commerce. She has around 17 years of experience in Ministry of Education, Singapore and another 17 years in Nanyang Technological University (NTU). She is the Chair for Center for Financial Literacy, National Institute of Education, Nanyang Technological University (NTU). Dr Keng made a presentation on ‘Past, Present and the Future: Reducing financial vulnerabilities from childhood’.
Dr Keng’s presentation mainly focused on how to make financial education interesting for children. She reiterated that there is a need to start financial education to the young kids while they are still in school. Her presentation dwelled on the key question as to how to make financial literacy relevant and interesting to the kids. She shared that in Singapore, Financial Literacy and Entrepreneurship programmes meant for students in schools and institutions of higher learning were started since 2009 with unique 'Learn through Play' technique that focused on making content and lessons interactive, fun, and engaging to help kids aged 6-17.
While discussing about financial inclusion and consumer empowerment in South East Asia, Dr Keng mentioned about the award winning "Cashvillekidz" app which helped students aged 9-12 years learn financial lessons by means of involving them in a series of 24 animated episodes which follow characters as they discuss financial education including savings, positive spending habits, and investment. The programme which was initially launched in Malaysia was later expanded to Cambodia in 2016. The programme was aimed at reaching 20,000 students at more than 100 schools. The programme won the Efma-Accenture Innovation Award in 2013 and the Global CSR Award in 2014.
Dr Keng put forward her deep thoughts about financial education by stating that the emphasis has to be placed more on value and not just on money alone. She added that right decisions about money need knowledge and skills and right attitude towards money. She opined that value-based financial education is all about 'Saving-Managing and-Sharing' the money and should be taught to young people. She added that it was necessary to unpack the knowledge, skills, attitudes, and values,
Dr Keng also shared about 'Center for Financial Literacy' in Singapore whose vision is "To empower educators to equip students to be financially savvy so as to make informed decisions and exercise discipline in managing their personal finance". The Center is committed to its mission of spearheading high quality education programmes with research embedded for continual improvement so as to provide evidence-based practices. Center also aims to achieve the mission through experiential learning exercises.
Towards the end of her presentation, Dr Keng highlighted on the need for networked learning community in an effort to move forward. She proposed Fintech as the next frontier in Financial Education. Fintech has already started disrupting and transforming human lives. She added that the kids need to be prepared for the future and taught about mobile payment apps, contactless technology, and personal finance management apps, ‘Peer to Peer’ lending, crowdfunding, and foreign currency platforms. Kids also needed to acquire new skills such as technology know-how, problem-solving, innovation, data analysis, and project management.
Dr Adele Atkinson made an official announcement when she closed session about OECD that OECD was made in-charge of 'World Money Week' two weeks ago and urged that anyone keen to participate in the programme could contact OECD. She assured that OECD would certainly respond and update about work that OECD had been doing.
After the closure of Session 3, participants of the programme headed to Chandragiri for sightseeing.
Source:OECD-SEBON; CONFERENCE AND ROUNDTABLE ON FINANCIAL CONSUMER PROTECTION AND EDUCATION IN ASIA-PACIFIC