India is the second most populated country in the world. It is also the fifth largest economy of the world. The population of India is around 1.3 billion The economy size is around 2.1 trillion India has an ambitious goal to reach 5 trillion economies in 2025. The main aim is to take its people out of poverty. The financial investment is one of the key element to reach the goal It is estimated around 68% of Indian earn less than $2 per day and from its around 25% earn less than $1.25.The demographic distribution of the population also showing around 70 per cent of the population lived in rural areas.
According to a report of Standard and Poor in 2019, around 76% of Indian people lack financial literacy. It is clearly evident that people of India don’t have the idea of how to invest their hard-earned money in an effective and efficient manner. Most of the people also want to rich in a short span of time. This behaviours of Indian people attract many fraud investors to take advantage of this. Every now and then there are many money laundering scams in every region of India. The money laundering, money duping cases are quite common in the unorganized financial sector of India or otherwise know as shadow banking.
The Government of India has established many financial regulatory bodies such as RBI, IRDA, PEDRA, SEBI to protect the general public from fraud investment.
But can we trust say institution that comes under the purview of these organizations are fully protected?
We may here consider the case of failure of two banks in recent times PMC bank and Yes Bank.
Both the cases of bank failure deal by RBI.
Yes Bank is a commercial bank and regulated by banking regulations act 1949. The customers face less litigation to receive their money The bank also protected by SBI.
PMC bank is a co-operative bank and regulated by co-operative societies act. According to rule,a multi cooperative bank can not take the share of another multi cooperative bank. This lead to many delays in the distribution of money to the public and many financial troubles. Some people also commit suicide.
The question is why it is still happening in 2020?
The answer is quite simple lack of financial Awareness. Most people don’t know what type of organization is this? How it is regulated? Is it protected fully? Is the investment covered by insurance?
Financial Awareness is the need of the hour Everybody should aware to manage finance safely and efficiently. RBI recently launch a program called National Strategy For Financial Education 2020-2025.
This program 5 Cs strategy Content, Capacity, Community, Communications and Collaboration to strengthen the Indian financial system through financial inclusion. The digital India program also provides information in different languages which can reach to most of the individuals.
The government also is making many efforts to protect hard-earned general public money. Now it is up to us how we can financially be educated to make our financial decisions most safely, effectively, efficiently manner. To make India to a 5 trillion economy a robust financial market is necessary for that there should be public trust in financial institutions.
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