Financial Inclusion comes with potential dangers without Financial Literacy
It is a known fact that by creating a financial inclusive society, we are helping in one way or another to eradicate poverty, provide better livelihoods, achieve gender equality, empowering women and provide quality education. Financial education plays a major role in helping individuals to access and use formal financial products in an efficient way. In fact, financial literacy can be considered as a demand side of financial inclusion, which is very important to promote financial inclusivity.
Financial literacy refers to the ability of an individual to take effective decisions regarding the management of money and understanding the importance of savings. Financial inclusion and financial literacy should go hand in hand to create an effective financial inclusive society which adds value to country’s overall economy. Financial inclusion without financial literacy comes up with potential dangers and can have negative impact on the society. In rural areas, farmers generally take loans that they have no capacity to service and they end up not repaying. In past, many have been driven to suicide because of debt problems.
Fraud due to financial and digital illiteracy is one of the challenges impacting financial inclusion. In rural areas, people normally work on the basis of trust. They have a tendency to trust others with ease which can be a major problem when it comes to the security aspect of formal financial product. Whey they trust someone, they don’t hesitate to share OTP or their debit card PIN because they are not aware of the consequences it could lead to. Their bank accounts are secured by PIN which they normally write on the card itself, and most of the times it leads to compromising of bank account. All these unfortunate events develop fear in their minds when it comes to using formal financial products and that’s why most of them would be more comfortable in doing transactions with cash rather than going digital.
Therefore, It becomes the moral responsibility of financial institutes that when they are providing these rural people with an access to financial services, they should focus more on educating these people on how they can manage their money using their products and what all security measures they must follow. Digitizing financial services is definitely the key in bridging the gap that exists between financial services and these underprivileged rural people. Financial institutes while trying to digitize the financial services through their exclusive range of products should make sure that these products are designed for people with low digital literacy. PaySe, a financial inclusion enabler, comes up with a digital transformation suite for financial institutions to digitize the entire process of making banking services accessible to the unbanked in remote areas. This suite is exclusively designed for the people with low digital literacy so that they can use PaySe with limited assistance.
PaySe team also makes sure to guide these rural people from time to time on how they can well manage their finances and save both time and money by using PaySe. At the end, our aim is not only to create a financial inclusive society but ensuring the financial and digital literacy as well so that it adds value to these people’s lives and eventually to country’s overall economy.