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'Poor people lack financial literacy'

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Our Regional Bureau Ahmedabad
Last Updated : Mar 18 2013 | 9:25 PM IST
Financial education for the poor is in a nascent stage of development in India and apart from the Ahmedabad-based Self Employed Women's Association (SEWA), there is no organised effort to educate the poor about microfinance opportunities, said Monique Cohen, president of the Washington-based Microfinance Opportunities.
 
He was delivering a lecture on Financial Education for the Poor at an international workshop on Financial Literacy for the Poor, organised by Indian School of Microfinance for Women and SEWA in Ahmedabad on Monday.
 
Of the total 75 million households living below the poverty line in the country, only two per cent have access to finance from banks and other institutions.
 
"Not just in India, the concept of financial education for the poor was almost unheard of even elsewhere a couple of years ago. There is an urgent need for more and more institutions to take up this movement," Cohen said.
 
SEWA Bank managing director Jayshree Vyas said that while SEWA has been engaged in financial education programmes for its members for the past three decades, it has recently joined hands with two other multinational voluntary organisations to train workers engaged in financial counseling. A manual handbook for trainers in financial counseling was also released on Monday.
 
Renana Jhabvala, chairperson, SEWA Bank said that studies have shown that the biggest contributing factor to indebtedness in the unorganised sector is health.
 
"Microfinance will emerge as one of the biggest strategies to reduce poverty and what is needed now is income security, social security systems, capacity building and organising workers on a larger scale," she said.
 
Stating that the role of financial education of the poor will help change the mindset of people from considering themselves as victims of a system to being able to take control of their lives, Jhabvala expressed the hope that financial education will also help people manage resources and generate savings.
 
Financial Education for the Poor is a collaborative effort of Microfinance Opportunities and Citigroup Foundation.
 
The project involves partnerships with five implementing agencies, namely SEWA Bank of India, Al Amana of Morocco, Equity Building Society of Kenya, Pro Mujer of Bolivia and Teba Bank of South Africa.
 
The US-based institutions, Freedom From Hunger and Women's World Banking, will give .technical support to the programme.

 
 

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First Published: Feb 04 2004 | 12:00 AM IST

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