The MF project collaborated with a Bangalore-based NGO Samarthanam to conduct our first financial literacy session in Bangalore in March 2019. The idea was to provide knowledge and insights about money, finance and basic investing to the underprivileged sections of the society.
Samarthanam is a trust that conducts numerous re-skilling and upliftment programs for the physically-challenged. Apart from this, Samarthanam, through its extensive skilling facility, teaches children and provides professional trainings to the underprivileged sections of the society. The volunteers and full time staff at Samarthanam teach about various topics such as computers, finance, first-aid, etc.
Our session with Samarathanam was open to all and we expected an audience of around 20-30. However, to our astonishment, we entered to a room full of close to 80 people. Our audience came from varied backgrounds – while some were about to enter the world with their first jobs, others had been doing odd jobs for a long time. Samarthanam was also generous enough to provide us with a sign language translator.
The audience participated actively in our discussions and a lot of ideas were exchanged related to money and savings – why should we save, how should we save, and so on. We emphasized on how one can cultivate the habit of savings in their daily routines with a case study of a person we helped in Mumbai. It was really encouraging to see people asking more questions to clear their understanding of money and savings.
Throughout this session, we got several insights into the lives of the people and how they save. A recurring theme that we noted was of falling into debt traps. Many of them admitted to taking easy loans from local money lenders ranging from Rs.5,000 to Rs.15,000. However, they were then unable to pay the astronomical interest amounts (sometimes, even above 25% p.a.) on those loans, facing the heat from the local lenders. Secondly, a large part of the audience still seemed to prefer keeping cash at home. Most of them kept 70-80% of their money in the form of cash at home, not earning anything on the idle amount.
All this information set us up perfectly to cover the second section of the talk – the importance of Aadhaar cards and bank accounts. We followed it up with the concepts of mobile wallets. Again, we learned that they preferred cash over these mobile wallets. The primary concerns were security and availability of cash. We helped them understand UPI and how platforms like Google Pay, BHIM and PhonePe are safer alternatives and as good as cash in most cases.
We also introduced the audience to the Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme. This scheme ticks all the boxes for one of the key goals and motivations for The MF project i.e. “banking the underbanked”. It is a revolutionary scheme for financial inclusion of the weaker sections of the society. We were taken aback by the fact that most of them were not aware about the scheme – despite being specifically targeted at people like them. A lot of time was spent on discussing about the scheme, its benefits and how one can open a PMJDY account.
Finally, we went on to teach them about investing. Before even starting, the audience had several questions, such as – what are mutual funds? Is investing safe? Can I lose money? We covered financial instruments like, fixed deposits, equity, debt, mutual funds and SIPs. An important theme that we covered here was “risk vs. reward” – a consideration that many in the audience were not clear about. While they had certain limited knowledge about mutual funds given the rampant regulatory and industry advertisements in India, their understanding was flawed in many aspects. We stressed on the philosophy of “not keep all your eggs in one basket” to make them understand how mutual funds work and how they are different from direct equity. We then covered Systematic Investment Plans or SIPs, which was alien to the audience, explaining where they fare better than investing lump-sum in mutual funds. Overall, our section on investing was very interactive and turned to be the most engrossing of all. The audience was indeed enthused to have their long-time questions answered!
One of the crucial things that we learned was that while many did possess some amount of financial awareness, it was incomplete. Case studies, simple real life examples and analogies of complex financial systems really helped us to make sure that the audience really understands the financial system of our country. The audience was particularly thrilled to know the philosophy of “Goal/Target based savings” and PMJDY scheme. We have just begun our journey here, and we hope to touch the lives of many more people as we move forward spreading more awareness among the masses.