Uttam Maharjan

Basically, literacy is concerned with the proverbial three R's: reading, writing and arithmetic. Now the scope of literacy has raced beyond this to cover such genres as computer literacy and cyber literacy. In recent days, financial literacy has assumed greater importance. Financial literacy would denote financial knowledge and skills required for making financial decisions. It may be noted that everybody has to make financial decisions which may be major decisions like making investments or starting a business, or minor decisions like household management. Financial decisions would also include making decisions on spending, savings and borrowing.

Social requirements
In Nepal, most people find it heavy going to eke out a living because their income is low, whereas market prices of the essentials they need every day are soaring high. In such a situation, it is imperative to budget for incomes and expenditures. Sometimes, people have to borrow to meet their household and social requirements. Here financial literacy comes in handy. Those who lack financial literacy are more likely to face hassles in managing their financial requirements. Such people cannot manage wealth (earnings, spending and savings) effectively. They may find it difficult to make plans regarding wealth management for the future.
On the other hand, those with good financial literacy can make prudent financial decisions. They can not only make prudent decisions on household management but also on education, healthcare, investment, retirement and many more. At present, there are various financial options. Bank deposits, bank borrowing, investments in shares, bonds, debentures and mutual funds, etc. are some of the financial options that can make people's life financially sound if such financial instruments are used judiciously.
Many countries have adopted strategies for enhancing financial literacy among people. In Nepal, the Nepal Rastra Bank (NRB) launched the 'NRB with Students' campaign targeted at students in 2014 AD. The NRB Strategic Plan, 2012-2016 AD focused on financial literacy programmes for women, conflict victims, ethnic minorities and deprived or marginalised people. Financial literacy has been encapsulated in the monetary policy since 2012.
The importance of financial literacy is more pronounced in the rural areas of Nepal than in the urban areas. The rural folks are usually naïve. So moneylenders are indulging in taking advantage of their naivety while giving loans to them. It sometimes happens that a person cannot repay his loan during his life even if he continues to repay the loan. This is because on the one hand, unscrupulous moneylenders would charge usurious rates of interest on the loans, while on the other they would even manipulate the 'loan deeds'. Financial literacy, no doubt, would impart financial knowledge to the rural folks and so they cannot be easily duped. Further, they will choose banks and financial institutions (BFIs) over the moneylenders to meet their financial requirements, if need be.
The BFIs have now adopted financial literacy campaigns as part of their corporate social responsibility. In fact, they have not only financial responsibilities but also social responsibilities. They can contribute to bettering social, cultural and environmental sectors. They can also play a pivotal role in improving the standard of living of the rural people. However, for this to happen the banking network should reach every nook and cranny of the country. Perhaps realising this, the NRB has instructed all the commercial banks to reach out to each local level. The commercial banks were instructed to cover all the local levels within the fiscal year 2074-2075. As they could not do so, they were again instructed to reach out to all the local levels by the previous fiscal year (2075-2076).
Despite this, not all the local levels have been covered by the banking network. As of the close of last fiscal year, the commercial banks had reached out to 732 out of 753 local levels. It is not that the commercial banks are hesitating to obey the NRB. There are, as a matter of fact, some reasons. Geographical difficulties, remoteness, lack of suitable branch locations, lack of suitable buildings, communication problems, etc. are some of the major stumbling blocks in the operation of the branches of the commercial banks. It may, however, be expected that the banking network will cover all the local levels within this fiscal year.
The commercial banks should extensively embark upon financial literacy campaigns, especially in the rural areas. Whenever a branch is opened in a rural area, it behooves the concerned bank to educate the people there about the importance of banking and other financial matters. This will help them to shuffle off the moneylenders, including Shylocks, and identify themselves with the banking sector. This will also help the commercial banks to mobilise some funds through their savings and even the amounts of remittance they receive from abroad.

Campaign
As per the Local Government Operation Act, 2074, the reserve funds of local levels are to be operated through commercial banks. Where there is no bank branch, such funds are being operated from the district headquarters. For this reason also, all the local levels should have the presence of at least one bank. With the expected coverage of the banking network at all local levels and the efforts on the part of the government, commercial banks and other entities like the NGOs, the financial literacy campaign is expected to gain momentum. In fact, the financial literacy campaign should be taken as a national campaign for the benefit of not only the BFIs but also for the government and the people themselves.

(Former banker, Maharjan has been regularly writing on contemporary issues for this daily since 2000 and can be reached at uttam.maharjan1964@gmail.com)