Financial inclusion and Financial Literacy by Sukhada Koppikar

**Slide 1: Title Slide**
**Title:** The Tale of Two Financial Journeys: Anjali vs. Shakti
**Subtitle:** Understanding the Impact of Financial Decisions
**Speaker Notes:**
Welcome everyone! Today, we’re going to explore two contrasting financial journeys—that of Anjali and Shakti. This presentation will highlight how financial decisions impact our lives and why smart money management is crucial.

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**Slide 2: Meet Anjali**
- A recent graduate who just got a job with a salary of **₹35,000 per month**.
- Excited about her new financial independence.
**Speaker Notes:**
Meet Anjali! She’s just stepped into the workforce, earning ₹35,000 a month. Like many young professionals, she’s excited about her newfound financial independence and eager to enjoy life.

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**Slide 3: The Credit Card Temptation**
- After a month, a credit card company offers her a card with a **₹75,000 limit**.
- She feels excited and powerful with this "free money."
**Speaker Notes:**
Soon after, she receives a credit card offer with a ₹75,000 limit. She sees this as an opportunity to spend more than she earns. The idea of ‘free money’ excites her, but she doesn’t fully understand the consequences yet.

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**Slide 4: The Shopping Spree**
- Anjali goes on a spending spree and **maxes out her ₹75,000 limit**.
- She realizes she cannot repay it in full.
**Speaker Notes:**
Anjali starts swiping her card for everything—clothes, gadgets, dining out. Before she knows it, she has maxed out her credit limit. Then reality hits—she can’t pay it off at once.

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**Slide 5: The EMI Trap**
- The credit card company offers her **EMIs to manage the payment**.
- She feels relieved and continues spending, taking more loans.
- Over time, her debt balloons to **₹5,00,000** due to interest accumulation.
**Speaker Notes:**
When panic sets in, the credit card company offers her an EMI plan, making it seem like a simple fix. Relieved, she keeps spending, but over time, her debt snowballs to ₹5,00,000 due to high interest.

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**Slide 6: The Financial Burden**
- Anjali now has to pay high-interest EMIs each month.
- Struggles to manage expenses and lifestyle.
- Financial stress starts affecting her daily life.
**Speaker Notes:**
Now, Anjali is struggling—her salary barely covers her EMI payments. She has little money left for necessities, and the stress starts taking a toll on her mental and financial well-being.

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**Slide 7: Meet Shakti**
- Shakti, another recent graduate, earns the same salary as Anjali.
- Instead of using credit recklessly, he **saves and reinvests his income.**
**Speaker Notes:**
On the other hand, meet Shakti. He earns the same ₹35,000 salary as Anjali but follows a different path. Instead of falling into the credit trap, he focuses on saving and investing wisely.
**Slide 8: Smart Money Management**
- Shakti follows the **50/30/20 Rule** (Needs, Wants, Savings).
- He invests in **mutual funds,

1. Financial inclusion & financial literacy in Indian context By Sukhada Koppikar

2. Learning Objectives : To Define Financial inclusion and Financial Literacy Identify its key challenges in India Propose solutions to promote financial literacy among underserved populations.

3. This is the rural-urban classification according to 2011 census. The green areas are villages in India. The red are towns and yellow are census towns.

4. Some of the many problems that we might be facing as a country… Inequality Poverty Wanting basic necessities Sanitation, etc

5. According to the Finance Minister N. Sitharaman “Inequality is better bridged nowadays than ever before,” One of the key drivers of reduced inequality,has been the government’s focus on financial inclusion. The number of adults with bank accounts in India has more than doubled since 2011, allowing previously underserved populations access to savings and credit facilities.

6. What is financial inclusion? Simply put: Access to useful financial products and services by individuals and businesses. Affordable and delivered in a responsible and sustainable way. Financial inclusion can be defined as Availability and Equality of opportunities to access financial services

7. Why Is Financial Inclusion Still a Challenge in India? 🔸 Lack of Financial Literacy – Many people, especially in rural areas, are unaware of banking and financial products. 🔸 Limited Banking Infrastructure – Remote villages still lack access to bank branches, ATMs, and digital payment infrastructure. 🔸 Trust Issues – Many people, particularly in rural areas, prefer cash over banks due to fear of digital fraud or past negative experiences. 🔸 Low Digital Adoption – While UPI and mobile banking are growing, many still struggle with technology, especially elderly and rural populations.

8. 🔸 Inconsistent Income Levels – Many informal sector workers have irregular earnings, making them hesitant to use banks or commit to financial products. 🔸 Gender Gap in Financial Access – Women, particularly in conservative societies, often lack independent access to banking due to socio-cultural restrictions. 🔸 Loan Accessibility Issues – Many banks hesitate to give loans to small farmers, micro-entrepreneurs, and daily wage workers due to lack of formal income proof.

9. Financial inclusion is not just about opening bank accounts ; it’s about ensuring people can use financial services effectively. While India has made significant progress , there is still a long way to go in bridging the urban-rural gap, improving financial literacy, and making banking accessible to all .

10. Successful example of financial inclusion The Maan Deshi Bank by women for women. Initially the RBI had rejected the license as women officers of the bank were illiterate women. https://www.youtube.com/watch?v=CWkhdc2u5uY&list=PPSV

11. Section 1: Banking & Savings Keeping money in a savings account is the best way to grow wealth over time. 🔲 Myth 🔲 Fact

12. Fixed Deposits (FDs) in Indian banks are insured up to ₹5 lakh per depositor per bank. 🔲 Myth 🔲 Fact

13. All bank accounts automatically offer the same interest rates on savings. 🔲 Myth 🔲 Fact

14. 🔹 Section 2: Loans & Credit A higher CIBIL score helps in getting better loan terms and lower interest rates. 🔲 Myth 🔲 Fact

15. Credit card debt does not impact loan eligibility as long as you pay the minimum amount due. 🔲 Myth 🔲 Fact

16. Ok How many of you would like to do the following? Buy a house Buy a Car Buy an iphone An expensive dream you have…

17. The Tale of Two Financial Journeys: Anjali vs. Shakti Understanding the Impact of Financial Decisions

18. Scenario 1: Anjali A recent graduate who just got a job with a salary of ₹35,000 per month . Excited about her new financial independence.

19. After a month, a credit card company offers her a card with a ₹75,000 limit . She feels excited and powerful with this "free money."

20. Anjali goes on a spending spree and maxes out her ₹75,000 limit . She realizes she cannot repay it in full.

21. The credit card company offers her EMIs to manage the payment . She feels relieved and continues spending, taking more loans. Over time, her debt balloons to ₹5,00,000 due to interest accumulation.

22. Scenario 2: Shakti’s Shakti, another recent graduate, earns the same salary as Anjali. Instead of using credit recklessly, he saves and reinvests his income.

23. Shakti follows the 50/30/20 Rule (Needs, Wants, Savings). He invests in mutual funds, fixed deposits, and stocks . Builds an emergency fund instead of relying on credit.

24. After one year, Shakti’s investments grow more than the amount Anjali loses in interest. He gains financial security and growth , while Anjali is stuck in a debt trap .

25. Credit cards are not free money – they come with high-interest rates. Avoid impulsive spending and learn financial discipline . Save and invest early for long-term financial growth . Be like Shakti, not Anjali!

26. Why does India need financial education

27. https://docs.google.com/document/d/1OQf-XeW6zCHZ9oylxQSgw198j-eDpveJ2zMNBUoJS4Q/edit?usp=sharing

28. Organization for Economic Cooperation and Development is the organization promoting financial literacy across the globe. Within which: International Network on Financial Education (INFE) promotes and facilitates international co-operation between policy makers and other stakeholders on financial education issues worldwide.

29. Now what is financial literacy Financial literacy in simple terms is managing your own funds. Financial literacy : Ability to control ones own money Manage and maintain money Save and Invest money Good financial behavior

30. Financial literacy is a complex concept, and it is important to understand its full import. In fact, as a society, we are yet to fully recognize the need and potential of financial literacy. Financial illiteracy permeates across all levels of society and economic strata

31. Key Concepts in Financial Literacy Budgeting Saving Investing Credit Management Debt Management

32. Budgeting Basics (15 minutes) Explain the 50/30/20 Rule (Needs, Wants, Savings). Show an example of a simple budget. Activity: Participants create a basic budget using an imaginary income

33. Saving: Building Financial Security Why Saving is Important Emergency Fund Short-Term vs Long-Term Savings Goals

34. Investing: Growing Your Wealth Unlike saving, which focuses on preserving money, investing aims to grow your wealth through appreciation, dividends, or interest. Risk : All investments carry some level of risk. The general rule is that the higher the potential return, the higher the risk involved. Reward : Successful investments can result in significant returns, but they also have the potential to lose value. It's essential to understand your risk tolerance before investing. Diversification (spreading your investments across various asset types) can reduce risk.

35. Key factors affecting your credit score: Payment History (35%) : Whether you've paid your bills on time. Credit Utilization (30%) : The percentage of your available credit that you use. Length of Credit History (15%) : The age of your credit accounts. Types of Credit Used (10%) : The variety of credit accounts you have (e.g., credit cards, loans). New Credit (10%) : The number of new credit accounts or inquiries you've made recently.

36. Types of Debt Good Debt Debt that is used to make purchases that will increase in value or generate income over time. Examples: Mortgages (homeownership can appreciate in value), student loans (education that can increase earning potential), and business loans (helping to grow a business). Bad Debt Debt used to purchase items that don’t appreciate in value or help you earn more money. Examples: Credit card debt (especially with high interest rates), payday loans, and consumer loans for non-essential items.

37. Strategies for Managing Debt Debt Snowball Method Debt Avalanche Method Debt Consolidation : Combine multiple debts into a single loan with a lower interest rate, making payments easier to manage. Refinancing : Replace an existing loan (such as a mortgage or car loan) with a new one at a lower interest rate, reducing the overall cost of debt.

38. Avoid debt trap Avoid High-Interest Debt : Credit card debt often comes with high-interest rates, which can make it difficult to pay off over time. Avoid borrowing for non-essential items. Pay More Than the Minimum : Paying only the minimum payment on credit cards or loans can prolong the debt and result in paying a lot of interest. Live Within Your Means : Ensure that your spending does not exceed your income. Creating a budget and sticking to it can help avoid unnecessary debt accumulation.