The Press Information Bureau Shillong has kickstarted a heated debate on whether merely having a bank account qualifies as financial inclusion and financial literacy. The discussion concluded that financial literacy goes much beyond simply having a bank account or knowing how to use a mobile payment app which many in rural Meghalaya are still not comfortable with. At its core, financial literacy includes the ability to understand the range of bank products and investment plans; how to manage one’s accounts online and to make informed decisions about money throughout one’s life. In rural Meghalaya and to an extent in the urban hubs too many people still don’t have long-term savings plans. A financially literate person understands how income is earned; makes weekly and monthly household budgets and saves whatever is possible even from a meagre income for future exigencies. Tribals generally do not as a rule have a saving habit but financial literacy demands that we understand the value of saving before spending. Often even bank loans for specific small enterprises end up being used to purchase consumer goods. Most small vendors don’t keep accounts and hardly know how much the working capital is or what the profit earned per day is. Unless someone maintains a cash book how will they know their earnings from daily transactions?
For a rural household in Meghalaya, financial literacy also means keeping track of income and expenses; planning for regular payment of bills such as children’s school fees, electricity and phone bills, expenses on food and transportation and also making allowances for ill health and keeping money aside for such emergencies. Above all it means avoiding unnecessary debts and setting financial priorities so that a family buys only what’s needed and does not spend on unnecessary items such as clothes, shoes etc. because of some festival or celebration or the other. But above all financial literacy tells us why savings matter and the different places to save money in a risk-free environment. These days many families borrow from banks for various reasons. It is important to know the interest rates and repayment schedules and how much the family will ultimately have to repay with interest. Also important is knowing the consequences if the borrower defaults on repayment. A person who understands that a moneylender charging 5% per month is far more expensive than a bank charging 10–12% per year is demonstrating financial literacy.
Coming to digital empowerment, this is only possible if a person is financially literate. In rural areas villagers prefer to enter a bank if the person behind the counter can speak and understand their language. Too often banking staff don’t show the inclination to provide the required hand-holding when semi-literate or illiterate villagers enter the bank. They come with apprehensions and it is only because of direct bank transfers that they are compelled to open accounts such as the Jan Dhan Account.Digital empowerment is a long way off because that means having a smartphone, knowing how to use it and above all having robust internet connectivity which in turn requires a stable power supply. All the above are still not guaranteed in Meghalaya’s villages as yet. Digital Financial Literacy or digital empowerment means the ability to use debit cards at ATMs and to do so safely and also to make digital payments and to be able to memorise passwords and PINs etc. In this aspect, rural Meghalaya still has a long way to go. Hence it is important to introduce financial literacy at the middle school level and not wait to do it in high school and college.
