Chapter 1: Introduction

1.1. Background:
Financial literacy can be understood as the ability to know how money works in a
normal course of action. Specifically it refers to the set of skills and knowledge that allows
an individual to make informed and effective decisions with all of their financial resources.
Financial literacy is directly related to the wellbeing of an individual and society as a whole,
since it helps an individual to manage their personal financial matters like savings,
investments, tax planning, retirement planning, etc. and enables them to understand how more
money can be generated and used in more effective and efficient manner. Noctor et.al (1992)
defined financial literacy as ‘the ability to make informed judgments and to take effective
decisions regarding the use and management of money’. The ability to manage personal
finances has become increasingly important in today's world. People must plan for long-term
investments for their retirement and children's education. They must also decide on short-
term savings and borrowing for a vacation, a down payment for a house, a car loan, and other
big-ticket items. Additionally, they must manage their own medical and life insurance needs.
Role of a woman has been an ever-changing concept. From generations, she has been
evolving in her own niche. But, the decade of 1960s registered a new era for women when
feminists demanded equal rights for her. It introduced the demand for women’s equality into
politics, organized religion, sports and innumerable other arenas. From then on, the picture
of the society has completely transformed. Today, she is not limited to some old 4X3 area of
the kitchen but rather has stepped out of the threshold of her house and joined the highly
professional corporate world. Her position from the previous times when she was hardly
given any right of liberty & equality has significantly improved, which was earlier beyond
someone’s belief and imagination.
Although women’s access to financial services has increased substantially faster in
the past 10 years, their ability to exploit this access is often still limited by the disadvantages
they experience because of their gender. Same is the situation with the financial literacy.
There is a gender gap between men and women in almost every country in case of financial
literacy as well. Worldwide, there is a five-point gender gap, with 65% of men not being
financially literate compared with 70% of women. In India, the gap is wider with 73% of men
and 80% of women not being financially literate (S&P survey, Dec 16 2015). While women
are less likely to provide correct answers to the financial literacy questions, they are also more
likely to indicate that they “don’t know” the answer.
Past studies have documented low levels of financial literacy in general among
different socio-demographic groups. Literacy levels are particularly low among women, and
among people with lower levels of family income and education. In a previous study, we
documented the same pattern in India as well. The findings of poor financial literacy and
financial outcomes have prompted a serious review of existing financial education programs
and launch of new programs globally. In India, the Reserve Bank of India (RBI) has mandated
that banks take the initiative to enhance financial inclusion and financial literacy in the
country. A draft national strategy for financial education was prepared and released by RBI
in July 2012. It is evident that there is a need to investigate the growing scepticism about the
effectiveness of financial literacy programs. A meta-study of over 200 studies on financial
literacy found that interventions to improve financial literacy had very weak effects, and the
effects were even weaker in low-income samples. It was also found that like other education,
the learning from financial education decays over time; the retention of learning even from
interventions with many hours of instruction is poor several months after the intervention.
One stream of literature3 treats the acquisition of financial knowledge as an investment in
human capital. The argument is that a low level of financial literacy may be individually
rational for certain groups of people because the cost of acquiring financial knowledge (time,
effort and money) exceeds the benefits. There could still be a role for financial literacy
programs if this perverse outcome is due to lack of easy and cost-effective access to financial
education. But if the low equilibrium is the result of low private benefits from financial
education, then such education programs would be less successful. For example, if
individuals perceive low benefits from financial education because their access to financial
products is limited, then they would have very little incentive to improve their financial
literacy even if they had access to free financial education programs. Moreover, in the absence
of opportunity to use their knowledge, any improvement in financial literacy may decay
quickly.
Financial knowledge has also been strongly linked to financial satisfaction (or
overall financial well-being). Based on this framework, financial wellness may be considered
as an important aspect of overall well-being. Financial wellness may be further subdivided
into four components: (a) objective status (as measured by income or other financial status),
(b) financial satisfaction, (c) financial behaviour, and (d) subjective perceptions, which
consist of financial attitudes and financial knowledge. The present study proposes the
application of measurements to several of the non-objective status elements of financial
wellness and to analyse differences by gender and by age group. Understanding of such
differences should provide insights for policy development and assist in directing future
research.
Gaining financial education is one step toward inclusion in the worldwide financial
system. By being unpaid for their labour, but also by being forbidden to inherit, own property,
get loans, and the like, women have been barred from participation in the money system for
millennia. Exclusion from the financial system is a significant disadvantage to a woman
struggling for economic independence. At a broad societal level, women do 66% of the
world’s work but earn only 10% of the world’s income. They reinvest 90 percent of their
income in their families and communities. Successful women mean more successful families
and more successful communities.

1.2. Indian Female Scenario:

In Indian cities, most of the women have access to basic financial services like
savings accounts, insurance schemes etc. But the basic problem is that they are not given
freedom to manage their finances independently. All major financial investment are done by
consensus taking into consideration the well-being of the family. So as such the financial
decision are not taken on their merit but are dictated by social responsibility. A woman can
only spend a small part of her income on herself. In order to maintain harmony in the family,
women let go of their financial freedom. It is important to consider not only disparities
between women and men, but also disparities within the larger population of women in any
one country. However, many national surveys do not have sufficient statistical power to
permit subgroup analysis. In this section, we rely primarily on the general research literature
and review studies that were found to cover specific subgroups of women. Although few such
studies quantitatively measure financial literacy, it may be possible to gain qualitative insights
about either the level of financial literacy or its particular importance for the subgroup of
interest.
1.2.1. Elderly Women.
Using their battery of financial knowledge questions find that women over 50 in the 2004 and
2008 Health and Retirement Study have significantly lower financial literacy than men.
Similarly, evidence shows that women aged 70 years or over have significantly lower mean
financial literacy scores than men of the same group, as well as women on average. These
insights are echoed by qualitative studies such as those undertaken by which indicates that
older women value financial independence but worry about their ability to retain it as they
age.Older women (65+) seen as a particularly vulnerable group for a number of reasons,
including that they may have had less formal education and are of the generation who left
financial matters to their husbands. Financial literacy becomes especially important for older
women when they are no longer able to work. It is important for older women to have a basic
level of numeracy so they can understand and deal with pension entitlements, superannuation,
investment opportunities and be aware of scams. Widows were seen as a particularly
vulnerable group who frequently required assistance to deal with, and make decisions about
property and other assets.
1.2.2. Young Women:
1.2.2. a. Financial education in schools:
Current life skills subjects offer the opportunity to explore financial education using relevant
examples such as mobile phone debt, saving to buy clothes, a car or other items, while the
personal development curriculum in schools provides an opportunity for discussion on career
choices and to hear from role models about choices and decisions that led to achieving career
goals.
1.2.2. b. Leaving home and starting work:
This stage was seen as a critical life stage for many young women and an orientation to the
financial information they will require is needed, to successfully negotiate this stage. This
includes budgeting; understanding employment agreements and contracts; knowledge of
superannuation; signing rental leases; entitlements to benefits; avoiding pitfalls such as debts
incurred from mobile phones, credit cards and car payments; as well as the consequences of
unpaid fines.
1.2.2. c. Having a family and middle age:
Women from the target groups agreed working women face multiple financial information
needs from around 20 to 50 years of age. A number of key transition points where life-stage
financial advice is seen as important, were common in all the groups.

Financial advice during this stage needs to include dealing with splitting assets, relationship
debt, benefit entitlements and the adjustments needed to live on one income. Low levels of
financial knowledge among women have been found in surveys covering younger groups of
the population and found that male college students outperformed female students on general
knowledge, savings and borrowing, and insurance and investment questions. A 2008 survey
of youth showed that young women were less likely to save, stick to their budgets, and have
sole responsibility for day-to-day finances as compared with men in the same group. While
they were more likely to own mainstream financial products such as checking and savings
accounts and student loans, they were also more likely to hold credit card debt and report they
could not cover all their expenses in some months. Young women express less interest in
personal finance than young men. Girls also appear to be less confident in learning
mathematics – perhaps indicating a discomfort when working with numbers that could impact
on their later financial behaviour: among school-aged children on average, girls report feeling
less confident than boys in learning mathematics.
1.2.3.Women Affected By Family Status:
Although few studies were found linking variations in economic well-being by family status
to financial literacy, more generally it is important to recognise that financial literacy can be
an important part of providing women with the skills to navigate the economic impact of life-
events related to family status (for example, divorce may entail reduced household income,
housing issues and becoming a lone parent). There is significant evidence, moreover,
documenting that marriage, childbirth, divorce, or widowhood differentially affect the
financial behaviour of women as compared to men. Women are also more likely to be
vulnerable to transmitted debt – that is taking on debt from a spouse or partner as guarantors
of loans— this debt remains even if separation occurs. Separation and divorce are therefore
more likely to impact older women’s economic well-being, resulting in increased
vulnerability to poverty. Survey shows that although marital disruption (through separation
or death) reduces the wealth of both men and women, the effects are more profound for
women. The changing status of families in present societies may therefore lead to increased
vulnerability for certain groups of women.
1.2.4. Female Entrepreneurs in High and Low Income Countries:
One important feature of household economic life that is less frequently analysed in national
surveys is self-employment, or entrepreneurship. In many instances, the line between
household finance and business skills is not well-defined, particularly if the enterprise is very
small. Financial literacy for women is particularly relevant to this domain, especially in
societies where women’s economic participation outside the home is limited to the typical
context of small-scale, informal household enterprise. A host of development organisations,
for instance the microfinance and self-help group movement, has thus attempted to increase
women’s empowerment by building women’s ability to successfully start and manage small-
scale or micro-enterprises
In South Asia, new evidence from randomised trials on microfinance loans for
women in India has found that microfinance leads to increased entrepreneurship but
ultimately yields mixed results on actual household expenditures and no effects on health,
education and other welfare outcomes Other evidence suggests that microfinance clients may
still have much to learn about how their loans work. Working with two large, women-only
lenders in India, Tiwari, Khandelwal et al. (2008) find that microfinance borrowers know
very little about the interest rate at which they have borrowed or about the total interest
expense on the loan and instead think about loans in terms of what they owe from week to
week.
The knowledge aspect of financial literacy alone however may not be enough: in
developing countries, a seminal study of entrepreneurs receiving small grants in Sri Lanka
finds greater investment returns among men as compared with women, even when controlling
for industry. While they find no evidence that the performance gap was explained by
differences in financial knowledge, women still puzzlingly either failed to invest in their
enterprises or did not generate additional profits when making investments, suggesting
failures in some other aspect of literacy. Key attitudinal factors that are part of financial
literacy such as motivation and confidence may also be important, especially where
institutional and social barriers are high, regardless of a country’s level of development.

1.3. Relevance:
Financial literacy is associated with the consumer who has a responsibility to inform
himself of the products he purchases and to understand the contracts he signs. It incorporates
knowledge, skills and attitudes. Financial education is a key tool to reach this
multidimensional goal. Financial capability, on the other hand, is about the context; it engages
the financial services sector in its responsibility to offer the right products to its various target
markets. Access to finance is not the same as use of financial services. Access refers to the
availability of a supply of reasonable quality financial services at reasonable costs, where
reasonable quality and reasonable cost have to be defined relative to some objective standard,
with costs reflecting all pecuniary and nonpecuniary costs. Use refers to the actual
consumption of financial services. The difference between access and use can be analysed in
a standard demand– supply framework. Access refers to supply, whereas use is the
intersection of the supply and demand schedules. One of the biggest challenges for our nation
is women empowerment which can only be attainable when they will be educated and
financially literate and independent. A financially independent individual is able to make
intellectual judgments and take effective choices regarding the usage and management of
money (Noctor et al., 1992).Since ages, this world has been a male dominated world, where
men run the society and women follow him. Women are the important constituent of our
society; rather they are the basis of human kind. It is rightly said that if we made a women
literate whole family becomes literate.
In 2015, the world literacy was 86.3%, among which 82.7% of women were literate.
The Indian scenario is bit grim where among 72% literate persons, 62.8% women were
literate. (“Literacy Statistics Metadata Information Table". UNESCO Institute for Statistics.
September 2015). These women, not only play an important role socially, but economically
also. In India, virtually women are the main spender of the family whereas the men are the
principal earner of the family. In earlier times the status of women was inferior compared to
men as they are considered to be the perfect homemaker in the world, who is supposed to do
the work of home and raise the family only. Though they had a higher status in scriptures,
they are preached in different names like Goddess Durga, Goddess Saraswati, and Goddess
Kali and so on. In modern times too their condition is not improved much, they were always
under the influence of their parents before marriage and their husband after marriage.
However the status of women in the modern time starts improving. Now women were given
freedom & right such as freedom of expression & equality as well as the right to be educated.
At this period various prestigious positions were held by women. However, some problems
such as domestic violence, dowry, sex selective abortion, are still prevalent.
India represents the fastest growing region in the global economy. Of significance, is
that more than half the populations in Country are women. The participation of women in the
economy would therefore not only enhance their own economic well-being but would also
contribute towards raising further the economic potential of country. Women are already
engaged in both the informal and formal sectors and are increasingly emerging as a more
important force in the economy. The effective participation, however, needs to be an informed
participation. Financial literacy among women becomes an important part of this process,
regardless of the income constituency to which they belong. There needs to be a better
understanding of their financial rights and responsibilities, and their opportunities for income
generation and the associated risks and costs involved. This is particularly important for India,
where rapid economic and financial transformation is occurring. Financial literacy among
women is thus a vital part of this process, not only to promote greater engagement of women
in the current economic environment, but also to prepare them for the future.
Today, she is heading organizations, taking power in hands and handling complicated
professional life efficiently and doing a lot more that she never did before. But, has she ever
made herself involved into financial matters too? Does she understand how important is
financial planning for ensuring an easy going smooth life? Or has she ever tried to give some
time to pick the best retirement plan?
A housewife who dedicates herself to family care, works day and night to ensure that
her house always remains in order. On monetary grounds, the only area she has been taking
care is the household budget. Her husband gives her some monthly amount to manage
household expenses and she does it successfully. She never gets herself involved in other
money matters that could be life-changing, leaving them on her husband to manage. Lack of
awareness on financial matters can force any housewife to a difficult situation in the future.
But it is very surprising, when in today’s world where the literacy rate of woman has gone up
so high, financial literacy in women has risen in some fraction only. Even the queries received
by expert financial columnist comprise 80% of men and only 15-20% from women.
Women are good at budgeting and managing household expenses but many women
take their steps back when it comes to take larger financial decisions and they generally leave
it to their spouses, fathers, brothers, etc, believing them to be financial experts. Women are
less experienced about the basic aspects of financial life. Usually they leave everything to
their spouses not realizing the trouble they might have to suffer in the event of widowhood,
divorce, spouse’s incapacitation, etc. A minimum basic level of financial literacy is very
essential for every woman so that they can live their life according to their own choices and
take their saving & investment decisions in more effective and efficient manner hence
contributing the healthy and prosperous life of their family as a whole.
Most women are often excluded from Financial Education at such they have little
or no financial capabilities (knowledge, skills and attitudes) that can empower them; this is
due to constraints such as level of exposure, literacy level, culture and even environment; that
hinder them from accessing financial education and the necessary financial services. 'While
implementing financial education program, Equity Group Foundation (EGF) realized that to
effectively increase women participation in their financial Education program, various
adjustments and adaptations had to be made. This included adjusting of training time and
frequency to fit the women time where they had to Manipulate between the times for
households’ responsibilities, business responsibilities and attending financial education
session. This allowed the women be able to attend the training sessions. Literacy levels also
hindered the comprehension of some sessions; hence the Foundation had to develop other
methodologies and approaches that enhanced the delivery of the training. Culture also come
in as a factor that hindered the women to attend the session, more so where FE was perceived
as a factor of education in some communities where females are not encouraged to get
education, also where male trainers could not train female participants due to cultural norms,
Then the foundation applied social and community inclusion to enable the women participate.
This factors among others led to women having fewer or no financial skills compared to their
male counter parts who are more exposed economical and socially. What skills do women
need to be financially empowered? One of the most critical path way to empowering women
is by providing them with financial education that will positively change their financial
attitude and behaviors, enable them achieve financial capabilities, enabling them be able to
make sound financial decisions, have confidence in financial matters and lead them to greater
financial access where they will be able to have equal access to financial services. Therefore
having sustainable lives socially and economically. Women require multifaceted financial
skills that are knotted with their life, livelihood and businesses this include skills in budgeting,
savings, understanding financial services, debt management, financial negotiation skills and
investments.

Globally, women use formal finance less than men and have lower levels of
financial literacy. However, it has been shown that women can and do use finance informally
as household managers. collateral requirements: lack of access to land and property rights,
low levels of education affecting literacy and financial training, male biased education, lack
of knowledge sharing: access to internet, IT skills, language barriers, legal environment:
inheritance laws preventing women from owning assets, lack of supportive legislation related
to maternity, social security, unemployment, health, gender discrimination: cultural, political,
and economic marginalization of women mental barriers: women's self-selection out of the
formal financial system due to social norms, patriarchal values, and lack of confidence lack
of supportive services to complement financial services: risk assessment training, business
development, marketing tools and networks, accounting, budgeting, interest rate calculation,
tracking household inflows and outflows, social investment funds access to adequate and
diversified financial instruments that match women's demand, unresponsive judicial system
As of 2011 India census, Kalyan-Dombivli had a population of1,246,381. Males
constitute 52% of the population and females 48%. Kalyan-Dombivli has an average literacy
rate of 93.06%, higher than the national average of 74.04%: male literacy is 96.11%, and
female literacy is 89.73%. As per provisional reports of Census India, population of Thane in
2011 is1,841,488; of which male and female are 975,399 and 866,089 respectively. The
Dadar Census Town has population of 5,389 of which 2,820 are males while2,569 are females
as per report released by Census India 2011. As per provisional reports of Census India,
population of Mumbai in 2011 is 12,442,373; of which male and femaleare
6,715,931 and 5,726,442 respectively. Although Mumbai city has population of 12,442,373.
25% of population of women of Mumbai lives in the suburbs .The purpose of this study is to
give an overview about the financial literacy among women in suburbs. To study various
demographic factors effecting the financial literacy of women in suburbs. To analyse the
impact of various policies and awareness program on women. This study will help to spread
awareness regarding the financial opportunities available for women.

1.4. Definitions and Conceptual Framework:

As per Reserve Bank of India, financial literacy can broadly be defined as the capacity
to have familiarity with an understanding of financial market products, especially reward and
risks in order to make informed choices. The National Financial Educators Council defines
financial literacy as: “Possessing the skills and knowledge on financial matters to confidently
take effective action that best fulfils an individual’s personal, family and global community
goals. OECD/INFE definition: 12 ‘A combination of awareness, knowledge, skill, attitude
and behaviour necessary to make sound financial decisions and ultimately achieve individual
financial wellbeing.’ Working with the definition, it appears that individual traits such as
cognitive ability (particularly numeracy), personality type, and preferences may affect
financial knowledge and skills acquisition, inherent motivation and confidence to make
consequential financial decisions and thus impact on levels of financial literacy. Learning-
by-doing generates an internal feedback loop – individuals update their knowledge, skills,
motivation and confidence with more financial experience. A lack of financial literacy,
therefore, all else equal, can both lead to and arise from differences in opportunities to gain
knowledge and exposure to financial matters. Most saliently for policymakers, individuals
may be exposed to financial education policies or programmes to increase their financial
literacy and know-how.
Mandell (2007) defined financial literacy as “The ability to evaluate the new and
complex financial instruments and make informed judgments in both choice of instruments
and extent of use that would be in their own best long-run interests”. Lusardi (2008) define
financial literacy as “Knowledge of basic financial concepts, such as the working of interest
compounding, the difference between nominal and real values, and the basics of risk
diversification”.
Noctor, Stoney and Stradling (1992) introduced, conceptualized and defined the term
financial literacy as “the ability to make informed judgments and to take effective decisions
regarding the use and management of money”.
Anthes (2004) stated that “personal financial literacy is the ability to read, analyze,
manage and communicate about the personal financial conditions that affect material well
being”.
OECD(2005) defines financial education is “the process by which financial
consumers/investors improve their understanding of financial products and concepts and,
through information, instruction and/or objective advice, develop the skills and confidence to
become more aware of financial risks and opportunities, to make informed choices, to know
where to go for help, and to take other effective actions to improve their financial well-being.”
Where, Information includes providing consumers the facts, data and specific knowledge to
make them aware of financial opportunities, choices and consequences.
Ben Bernanke (2011) highlighted the need for continual updating of financial
literacy across all age groups because of the dynamic nature of financial products and services
as well as the changing needs and circumstances of individuals with time. He observed that
exposing young people to financial concepts is particularly important as they are vulnerable
to the temptations of taking excessive debt.
Moore (2003) stated that “Individuals are considered financially literate if they are
competent and can demonstrate they have used knowledge they have learned. Financial
literacy cannot be measured directly so proxies must be used. Literacy is obtained through
practical experience and active integration of knowledge.
As people become more literate they become increasingly more financially
sophisticated and it is conjectured that this may also mean that an individual may be more
competent”. Information provided to consumers includes facts, data and specific knowledge
to make them aware of financial opportunities; instruction involves ensuring that individuals
acquire the skills and ability to understand financial terms and concepts through training and
guidance; and advice involves providing consumers with counsel about generic financial
issues and products to help them make the best use of available financial information and
instruction. Finally, features of the external environment other than policies with an explicit
financial literacy mandate may also affect the acquisition of financial literacy, such as the
availability of basic education or cultural norms surrounding the acquisition of material
wealth. This simple conceptual framework describes the different factors that feed into
financial literacy. Insofar as gender differences in these various factors exist (i.e. differences
in personal traits, learning opportunities and exposure or access to enabling features of the
external environment), these may then contribute to the existence of gender differences in
financial literacy.

1.5. Importance of Financial Literacy:

Empirical evidence suggests financial literacy’s positive impact on financial
behaviour and financial status in a number of behavioural domains. Financially-literate
individuals do better at budgeting, saving Empirical evidence suggests financial literacy’s
positive impact on financial behaviour and financial status in a number of behavioural
domains. Financially-literate individuals do better at budgeting, saving money, and
controlling spending; handling mortgage and other debt; participating in financial markets;
planning for retirement; and ultimately, successfully accumulating wealth. Other work has
further demonstrated the link between financial status and other important aspects of
household well-being, notably low financial status correlates with poorer physical, mental
and emotional health outcomes for all household members and lower educational attainment
of children. money, and controlling spending; handling mortgage and other debt; participating
in financial markets; planning for retirement; and ultimately, successfully accumulating
wealth.

Finally, on a macro-level, households that accumulate formal financial experience

generate greater demand for financial products; pressure for market transparency,
competitiveness and efficiency; while increased wealth accumulation and increases in the
private savings rate—in combination with well-functioning markets—builds economic
stability, stimulates economic activity and leads to increased development. We note that,
despite its significance, recent international efforts to measure financial literacy (reviewed in
more detail later) suggest that levels of financial literacy are low, on average, on a number of
metrics across countries. The typical consumer has limited objective as well as perceived
subjective understanding of financial issues, and many consumers express lack of
ability/motivation to gain and understand financial information and knowledge (see Yoong,
2010 for a more expanded description).
Individuals’ ability to make appropriate financial decisions may be increasingly
important to ensure positive outcomes as the external environment becomes more
challenging. Such challenges include the decline of public welfare policies; a shift to defined
contribution pension schemes in many countries; increased life expectancy and health care
costs in old age; the development of more complex financial markets; and the recent effects
of the global financial crisis and recession. Surprisingly, while the need for financial literacy
may be largely acknowledged, the importance of a gender dimension remains a subject for
debate. While recognising that country-specific context varies widely, we argue that there are
three key aspects of a general rationale for considering the needs of women. Firstly, where
gender differences in financial literacy do exist, there are both philosophical and pragmatic
reasons for addressing them. While it is important to refrain from ex-ante assuming the
direction of a gender gap, evidence discussed later in the text suggests that women tend to
have lower levels of financial knowledge. Women are also shown to be relatively less
financially skilled than men along several dimensions. Such gaps represent fundamental
problems for social equity, with several important follow-on implications.
 There may be unrealised potential for gains in economic efficiency among one-half of the
population, particularly in societies where a relatively large share of production takes place
in informal home-based enterprises run by women. Low levels of female financial literacy
and confidence may impede their more active participation in the economy.
 Financial literacy differences may affect relative economic power within the household.
This has implications for well-being if men and women allocate household resources
according to different preferences. Research in many countries suggests that households do
not act as a single unitary decision maker. Instead, household resources in women’s hands
has been observed to be more likely spent on improving family well-being, particularly that
of.
 In situations where women are primarily responsible for the care of children and more likely
to be single parents, this may impede the intergenerational transmission of financial literacy,
affecting the early learning, behaviours and attitudes of next generation consumers.
 Such differences are potentially compounded by the existence of the experiential feedback
loop, as such differences can further reinforce and exacerbate other disparities between men
and women.
Establishing and protecting economic empowerment on an equal basis for men and
women has been recognised both as a basic human right, and as an issue for policymakers.
Indeed, women’s empowerment is seen as a “prerequisite for sustainable development, pro-
poor growth and the achievement of all the Millennium Development goals” (GENDERNET,
2011). Secondly, women may be in greater need of long-term wealth management skills for
a combination of reasons related to labour and demography. Women’s labour market tenure
tends to be shorter and both tenure and occupational choice may be more constrained by social
norms, access to labour markets and family issues such as childbearing. In some countries,
women are also subject to lower pay relative to men, all else equal, setting the stagefor lower
accumulated savings. At the same time, demographic considerations place women in a
position of economic need. As well as being primary caregivers for children in many
instances, women are more likely to be lone parents. The financial consequences of divorce
are also more severe for women. More generally, women’s life-expectancy is longer and, in
some countries, women are disadvantaged in terms of legal and property rights which can be
exacerbated by widowhood. On average—looking across 121 countries representing a wide
mix of developing and developed nations—women live five years longer than men. Past
research has shown that the death of a spouse often precipitates women into poverty. Early
research using data from the Longitudinal Retirement History Survey showed that the death
of a husband increased the household probability of poverty from less than 10 to more than
35 percent. Similarly, the loss of a spouse substantially decreases women’s economic well-
being in a study of four developed countries. More recent cross-national research in
developed countries confirms that older, single women continue to be disproportionately poor
as compared with older single men and older married couples).
Demographic differences, e.g. age or life expectancy; personality traits (such as
patience and risk-aversion); and basic environmental constraints (such as rudimentary formal
education and mathematics training) may all factor into differences in the learning patterns
by gender. Women and men may also experience different environmental constraints e.g.
occupational and cultural norms limiting where, when and how they best learn about personal
finance. Distinguishing between these differences is important as they may call for very
different policy responses: effective financial education interventions may need to address
different root causes and be designed with the learning styles of men and women in mind. It
is especially important to avoid further gender marginalisation as an unintended consequence
of bad policy design. The remaining part of the report reviews the existing evidence on gender
differences in financial literacy and factors which may underpin them.
In today’s scenario, emerging as well as developed economies has started giving
very much focus on the level of financial literacy of their people. The financial system plays
a very significant role in the development of any nation. Financial ignorance carries
significant costs. Consumers who fail to understand the concept of interest compounding
spend more on transaction fees, run up bigger debts, and incur higher interest rates on loans.
The consumers need to be financially literate to be able to understand the financial world and
make well-informed decisions that will be profitable. The need for financial 48 Financial
Literacy among Women – Indian Scenario literacy in a country like India is because of:
1.5.1. Increase in Life Expectancy:
Now a day, the people become more conscious about their health and improvements in health
care services has increased the life expectancy in India, which results in a longer time to spend
in retirement. This will certainly increases the need of financial planning such as savings for
post-retirement, investment decisions, expanded insurance plans and provision for unexpected
future eventualities. Only knowing the importance of financial planning is not enough, the
individual must know how they can make their financial planning in better way so that their
purposes could be achieved. For doing better financial planning one must knowthe basic
concepts of money management like computation of compound interest, risk diversification
etc. Hence focusing on the importance of having minimum level of financial literacy.
1.5.2. Innovations in Financial Products/ Services and Technological Development:
Liberalization, development in technology, deregulation and increased level of financial
inclusion provides a wide range of financial products and services delivering through various
channels thus providing consumers more choices to invest their savings. The available
products are more complex in nature thus required some factors to be taken care of such as
interest charged/ received, fees charged and level of risk involved etc. The greater opportunity
available in financial products/services could only be utilized when one can have the better
knowledge and must be aware about it. Since there is a wider range of options for savings
one must have the skills to analyse which option is better for them and which will help them
in accumulating their wealth. The development in technology has changed the functioning of
the financial markets and making the transactions speedier. Financial literacy helps the
individual to make their financial decisions in more effective and efficient manner thus
helping in wealth accumulation. Moreover, due to technological development now days
almost every bank provides their services with the help of internet banking and also through
various mobile apps thus providing ease in accessing the financial services. But only knowing
this is not enough, one must have the skills and knowledge of using these apps, must have the
skills to identify the authentic apps because these are not free from cyber theft. Hence,
financial literacy becomes important.
1.5.3. Shift in Risk:
The risk has been transferred from government and employer both to individuals. Now, one
has to plan their financial security by themselves so that they can secure their future and may
save their money for after retirement period. Every financial products/ services involves
certain risk but due to increased complexities in the financial market the financial products/
services become more risky. Many times people are unaware of the risk they might have to
face due to lack of financial knowledge and skills. Most surveys show that a majority of
workers are unaware of the risks they now have to face, and do not have sufficient knowledge
or skill to manage such risks adequately, even if they are aware of them (OECD, 2008). So
being aware only regarding financial market or product/ services may not fulfill the purpose,
one must have the skills and knowledge to analyse the information available properly then
only the investments in financial market proves to be profitable.
1.5.4. Change in the Structure of the Family:
Earlier, in joint family the decisions were taken by the head of the family with the consent of
every member and each and every one is accountable for that decision. The profit earned or
the loss suffered was shared among everyone in the family, no one is solely responsible for
profit or accountable for loss. Now days the structure of nuclear family increases the
responsibilities of individuals in respect of spending, saving and investment. The conception
of nuclear family appeared in the early twentieth century. The concept of Liberalisation,
Privatisation and Globalisation opens the greater job opportunity which increases the mobility
of an individual. For grabbing the better opportunities the individual starts moving from their
native places and thus get separated from their whole family. Since the nuclear family consists
of only husband, wife and their children so the responsibility of decision making is on the
two persons only. The individual is only responsible for their decisions and may have to face
consequences of their choice. Individuals need to be financially literate so that they can make
informed and accountable decisions.
1.5.5. Effective Management of Expenses and Income:
Women are generally the managers of the household expenses but men take a step forward
when it comes to managing the surplus. Making women financial literate ensures that they
are aware of both the expenses and how the investments are being managed. It thus ensures
that they have a complete control over the finances of the home and are able to manage it
effectively.
1.5.6. Helping in the overall economic growth:
Education of women is a very important step towards nation building. Financially literate
women play an important role in economic growth. This emphasises that making women
financially independent by educating them properly creates the base for a prosperous future
for the country. Financially literate and independent women have scaled to new highs in their
professional lives too.
1.5.7. Empowerment:
Gender inequality has always been a problem in hampering harmony amongst men and
women. Providing women with the requisite financial literacy helps overcome this disparity
and ensure the women are confident and empowered to take the right choices with the
complete information being made available to them.
1.5.8. Retirement planning:
This is an area which impacts both the genders, but more so the women when they don't
pursue their careers, but plays the critical role of a housewife. By imparting financial
knowledge to women and providing the right tools in their hands, this segment of the
population can play a decisive role in ensuring a proper retirement plan which takes care of
both the husband and the wife.

1.6. Barriers to Financial Literacy among Women:

Lack of proper trained skills, lack of enabling laws like on social cash transfer and
business access, lack of deliberate government initiative to allow women participate in
economic activities even those local women...like village banks, community suppliers of
goods and services to government/pvt institutions etc. Socialization, stereotypical attitudes,
and cultural values that promotes patriarchy and its ramifications. Financial literacy and
financial inclusion are two facets of an efficient economy and ensures financial stability in a
country.
In April 2012, Visa released the results of its financial literacy survey which was
conducted between February and April 2012 with 25,500 participants in 28 countries. The
Financial Literacy Survey revealed that Brazil had the highest level of financial literacy at
50.4% of the respondents followed by Mexico at 47.8%, Australia – 46.3% and USA with
44%. India was ranked 23rd in the report with only 35% of Indian respondents as financially
literate (Visa’s International Financial Literacy Survey, 2012). As per the survey conducted
by the financial service giant VISA in the year 2012 Indian women was ranked on 19th with
only 36.8% of Indian respondents as financially literate. Survey was conducted between
February and April 2012 with 25,500 participants in 27 countries. The Financial Literacy
Survey revealed that women in Brazil had the highest level of financial literacy at 50.2%,
followed by Australia – 48.8%, Mexico at 47.8%, and USA with 44.6%. Survey revealed that
37.9% women in India followed the household budget in comparison with Brazil which had
the highest rate of 51.8%. Further, India ranked on 13th with 31.3% women only who save
for an emergency among 27 countries. Another survey conducted Standard & Poor’s among
1,50,000 adults from 140 countries, only 14 % Indian adults were able to answer the questions
on risk diversification, where only 51 % understood the concept of compound interest and 56
% were answer correctly on inflation.
1.6.1. Education:
One of the biggest problems of our nation is low literacy rate. In 2015, the world literacy was
86.3%, among which 82.7% of women were literate. The Indian scenario is bit grim where
among 72% literate persons, 65.46% women were literate whereas 82.14 % men were literate.
Moreover, literacy rate among urban women were 79.01 % whereas only 57.09 % rural
women were literate. Due to lack of basic education the numerical abilities among women
are poor which restrict them to analyze the financial information properly caused poor
financial planning which ultimately affects their saving & investment decisions and the
wellbeing of the family as whole. Moreover, Lack of higher education among women creates
problem in understanding the basic concepts of financial literacy like computation of
compound interest, analysis of inflation, risk & return trade off and portfolio diversification
etc.
1.6.2. Social and Cultural:
Since ages, this world has been a male dominated world, where men run the society and
women follow him. Specially earning capacity has been the main source of power for the men
to run the society. These women, not only play an important role socially, but economically
also. In India, virtually women are the main spender of the family whereas the men are the
principal earner of the family. Today, we are in the era where women are at par with men but
still the women who were working outside were not accepted socially, they were treated as
irresponsible regarding their in-laws, husband or their children. Moreover, even when they
are working they were not having any right to use their earned money according to their own
choices because in Indian culture the decision making lies only in the hands of male member
of the family. Because of all these social and culture pressure the women in spite of having
knowledge and talent were not able to prove themselves which ultimately creates problem in
their empowerment socially as well as economically. Although women’s access to financial
services has increased substantially faster in the past 10 years, their ability to exploit this
access is often still limited by the disadvantages they experience because of their gender.
1.6.3. What If Factor:
Another challenge to women is the "what if' factor. Women's lack of confidence and
knowledge with regard to money management affects their capability to achieve their
financial potential. There is a fear among women that if they ask questions relating to their
financial matters, they will be treated as uneducated or uninformed. In addition to this there
is a fear among them that the process is so complex that they will not understand well or not
able to access the information related to financial matters. Moreover, they were not consulting
any financial adviser who can help them in making their financial planning in fear that they
may charge more fees or may misuse their money or may cheat them. This all create hurdles
in gaining the knowledge about the basic money management.
1.6.4. Financial Barriers:
Majority of the women are not an earning person in a family. Even if they are working, they
cannot take their financial decisions independently in their family. The money earned by them
were treated as additional money which was only meant for spending on the leisure of family,
hence they cannot use their own money on themselves as per their choices. Many times the
poor financial condition of a family creates a reason for women to work. In all these
conditions women were not free to take their own financial decisions as per their choices and
because of this in spite of having eagerness to be financial literate they were not able to gain
financial knowledge properly, since they don’t have enough money with themselves to afford
to have financial education from the institutions to get financial knowledge, attend seminars
or workshops on financial matters and could not join various awareness programs on financial
literacy etc.
1.6.5. Physical Barriers:
Sometimes poor infrastructural facilities create a hindrance for women. Due to lack of private
transport and less reliance on public transport services women were not able to attend the
courses specially focused on financial education or not able to attend the awareness programs
on financial education run by the government at different places. Many times, they were not
using banking services on regular basis and find it frustrating and time & cost consuming
activity only because of less availability of good transport facility. Less availability of
financial institutions and financial educations centre is also one of the physical barriers for
women. Moreover, the greater use of computer now a day also act as a physical barrier for
women because they were not very much frequent users of computers and find it very difficult
to operate on the system.
1.6.6. Gender pay gap:
Article 39 of the Indian Constitution states that men and women are entitled for equal pay
against equal work. But that is hardly practiced. According to a 2017 article of India
Responsible Business Forum (IRBF), women are paid 27% less as compared to men.
1.6.7. Longer periods of absence from work:
Indian women often adopt the role of the primary care giver. Even though the concept of
house husband is becoming popular overseas, India is yet to notice such change. Thus,
women encounter longer career breaks due to pregnancy, ailing parents and other
dependents. A direct impact of this is visible in the reduced advancement opportunities and
super-annuity benefits offered at retirement. These factors make financial planning all the
more important for women.

1.7. Efforts Made in the Field of Financial Literacy:

Research from around the world on financial literacy raises serious concerns about
the ability of individuals to secure their financial well-being. There is evidence that
individuals under-save, fail to invest wisely and are often indebted. Past studies have
documented low levels of financial literacy in general among different socio-demographic
groups. Literacy levels are particularly low among women, and among people with lower
levels of family income and education.The findings of poor financial literacy and financial
outcomes have prompted a serious review of existing financial education programs and
launch of new programs globally. In India, the Reserve Bank of India (RBI) has mandated
that banks take the initiative to enhance financial inclusion and financial literacy in the
country. A draft national strategy for financial education was prepared and released by RBI
in July 2012. For instance, SEWA Bank in India to develop ‘individual touchpoint’ training
for its low-income women clients. We designed a financial education program that embedded
concrete, relevant, timely and actionable information in the day to day interactions of their
clients with their neighborhood agents, called saathis. Clients were encouraged to create
savings plans that showed progress toward their goals and the ramifications of missing a
deposit. Initial evaluations of the pilot found that women who received the training increased
their savings by 10% compared to a control group that did not receive training.
Ministry of Finance (GOI) established several institutes purely based on finance in
order to meet the demand of global finance market and carports’. INDIAN INSTITUTE OF
FINANCE (IIF) founded in 1987 as a non-profit autonomous educational institution, to
promote education and research in Finance. Indian Institute of Banking and Finance (IIBF)
(formerly The Indian Institute of Bankers) was established in 1928. With more than 650
Institutional Members and over 2.5 lac individual members, it is the largest Institute of its
kind in the world and is working with a mission "to develop professionally qualified and
competent bankers and finance professionals. The institutes offer education, training,
examination consultancy/counseling and continuing professional development programs”. It
is our strong conviction that, through an increased understanding of banking and finance,
people can enjoy better, more secure and more satisfying life. 84 National Institute of
Financial Management (NIFM) was set up in 1993 as an autonomous body under the Ministry
of Finance, Government of India. NIFM is registered as a society.

Some Kinds of Financial Education Programmes for Women Currently Exist

1.7.1. RBI’S Initiatives on Financial Literacy:

The Reserve Bank of India has undertaken a project titled "Project Financial Literacy". The
Objective of the project is to disseminate information regarding the central bank and general
banking concepts to various target groups, including, school and college going children,
women, rural and urban poor, defence personnel and senior citizens. The project has two
modules, first module is focused on the economy, functioning and activities of RBI and
second module is focused on the general banking functions. The Bank on its web site has also
created a link to facilitate easy access to information for the common people; the information
is available in 13 regional languages which helps people in their dealings with banks.
1.7.2. SEBI’s Initiatives in the Field of Financial Literacy:
Securities and Exchange Board of India (1992) has designed different modules in their
financial literacy program at different segments like financial education at school level, at
college level. They have different modules for executives, home makers and middle income
group. SEBI has their resource person who have the knowledge of financial markets on
different aspects and these executives organize different workshops for making aware of basic
financial matters like savings, investments, insurance, retirement planning etc to all the target
group.
1.7.3. IRDA’S Initiatives in the Field of Financial Literacy:
Insurance Regulatory and Development Authority Act (1999) has taken various initiatives in
the field of financial literacy. They conducted different awareness programs and circulated
simple messages about the rights and duties of policyholders through television and radio
channels. IRDA conducts an annual seminar on policy holder protection and welfare, and also
publishes the “policyholder Handbooks” as well as various comic series on insurance.
1.7.4. Initiatives by other Banks:
Apart from the Reserve Bank of India and other commercial banks, the private banks and
multinational banks also do their effort to boost the financial literacy. The initiative in opening
FLCCs in the country such as initiative of Bank of India, “ABHAY‟ Counselling centre and
Disha Trust, an initiative of ICICI Bank Ltd. Many other Banks are reaching out
to the financially excluded in at least three modes, separately or in combination. “Sarthee”
Bank of India’s Programme is “Abhay” and Canara Bank Mobile Van called “Canara
Gramina Vikas Vahini” while Dena Bank named its programme as “Dena Mitra”, Allahabad
Bank has named its programme as “Samadhan”.
1.7.5. Initiatives by Non-Government Organisation (NGO):
Non-Government Organisations started financial literacy programme as a part of their Self
Help Groups development programme. The Mangalore based Institutions started a
programme named “Jnana Jyothi Financial Literacy and Credit Counselling Trust” which was
jointly sponsored by Syndicate Bank and Vijaya Bank. People’s Education and Development
Organisation (PEDO), Durgapur. Rajasthan, IBTADA, Alwar, Rajasthan, Centre for
Community Economics and Development Consultants Society (CECOEDECON).
1.7.6. PFRDA Initiatives on Financial Education:
The Pension Fund Regulatory and Development Authority, India’s youngest regulator has
been engaged in spreading social security messages to the public. PFRDA has developed
FAQ on pension related topics on its web, and has been associated with various non-
government organizations in India in taking the pension services to the disadvantaged
community. PFRDA’s initiatives have become more broad-based with direct mass publicity
on NPS – both as individual model through POPs and group models through Aggregators.
PFRDA has issued advertisements in print media and electronic media through radio and
television. PFRDA appointed intermediaries are called Aggregators who are directly
responsible for pension awareness mostly in vernacular languages and in line with socio-
economic sensibilities.
1.7.7. Commercial banks:
The role of banks is important as banks are the pillars of financial market. Commercial banks
have initiated various measures for creating awareness about products through Counseling,
Centers and Rural Self Employment Training Institutes on financial literacy. The objective
of these centers is to advise people on gaining access to the financial system including banks,
creating awareness among the public about financial management, counseling people who
are struggling to meet their repayment obligations and help them resolve their problems of
indebtedness, helping in rehabilitation of borrowers in distress etc.

1.8. Determinants of Financial Literacy and Education:

Financial education is “the process by which financial consumers/investors improve their
understanding of financial products and concepts and, through information, instruction and/or
objective advice, develop the skills and confidence to become more aware of financial risks
and opportunities, to make informed choices, to know where to go for help, and to take other
effective actions to improve their financial well-being.” The financial literacy level majorly
depends upon the education and income of the individuals; the social factors such like family
size, family background, age, regions nature of employment have a little impact on this.
1.8.1. Gender:
Financial literacy is affected by gender as women’s literacy in India is matter of debate since
past, hear as women’s are saving rate among women’s is high not in formal ways as there are
several biasness only the matters of education among them .in the present periods India has
improving status of women’s in terms of educations as well as employment level.
1.8.2. Age:
Financial literacy follows an inverted-U shape with respect the age. Financial literacy
increases among the youths is high as soon as the age increases it decline this is may be due
to time as soon as time varies a lot of changes took place in the financial market and youth is
make effort to update and accept the changes.
1.8.3. Education &Income:
Financial literacy is associated with higher educational attainment and income. As soon as
the education levels of individuals increases their understanding about the financial terms and
clarity about their financial needs and goals in order to protect their finance they increases
the effort toward the accessing the information ,which ultimately enhances their knowledge
of present financial services and products.
1.8.4. Geographical region &Employment:
Financial literacy is associated with more sophisticated investment. Financial literacy is
independent of geography and religions of the individuals. While it is dependent upon the
nature of employment the privet employees have better levels in comparison of government
employees.