Financial Literacy Day was celebrated for the third time in Bangladesh on March 3 this year. In 2022, a circular of Bangladesh Bank decided to observe Financial Literacy Day on the first Monday of March every year.
In light of the same circular, Bangladesh Bank published the 'Financial Literacy Guidelines for Banks and Financial Institutions' with the aim of increasing overall financial inclusion and expanding financial literacy in Bangladesh, where the policy decision to observe the Financial Literacy Week programme every year was taken.
In line with this policy, banks and financial institutions have been urged to observe 'Financial Literacy Week' in Bangladesh from March 17 to 23 this year, although the observance of the 'Financial Literacy Week' has been asked to be somewhat limited due to the holy month of Ramadan.
Financial literacy refers to the financial knowledge, skills and attitudes of an individual, which an individual uses to manage his or her money properly.This includes proper planning of income and expenditure, forming savings habits, understanding investment strategies, understanding debt management and interest rates, and acquiring the ability to assess and deal with financial risks, etc.
Increasing the financial knowledge of the general public and improving their ability to make the right decisions on financial matters is an important standard of our day-to-day life. Financial literacy is not only for personal development, but also for the development of the overall economy.
The highest levels of financial literacy are achieved in developed countries. Because better financial stability with higher security is synonymous with a country's economic progress. According to the World Bank, about 45 per cent of the adult population is still unbanked, which can be a big barrier to our esteemed economic progress.
Although the Government, Bangladesh Bank, various institutions and NGOs are currently working together to increase financial literacy, 30 million people are still out of banking activities in Bangladesh. A survey results show that only 33 per cent or one third of adults in the world are financially literate.
The history of the programme that we are currently implementing, which is broadly called financial literacy, began in the early twentieth century. This initiative gained momentum worldwide from the 1990s. The subsequent historical trail is very clear.
In Bangladesh, the gap in financial literacy between men and women is increasing. Although 35 per cent of adult men and 30 per cent of women are financially literate in the world, this gap is not very small worldwide. This education gap exists in both developed and developing economies and does not seem to be going away anytime soon.
From a global perspective, this financial literacy gap is also a major obstacle to progress in Bangladesh. Here, About 72 per cent of people are still not familiar with banking services, banking products or how to use them. Among adults, 43.46 per cent of women are accessing formal financial services, while 62.86 per cent of men are accessing formal financial services.
Due to the prevailing social norms and gender discrimination in the country where 68 per cent of the remote population are women, many of whom are unable to access formal financial services due to cultural constraints, mobility constraints and financial incapacity.
Realising the importance of financial literacy in individual lives, the Organisation for Economic Cooperation and Development (OECD) launched a financial literacy and awareness programme in the United States and Europe in 2003, which later spread worldwide.
In the same year, the 'Financial Literacy and Education Commission' (FLEC) was formed in the United States to promote education and training in financial management. At that time, financial education programmes were also launched at the school level in various European countries.
Similarly, various commercial banks in India set up financial literacy centres in 2013. Although in 2005, a pilot project was launched in Mangalam village, India, to provide banking facilities to all families, setting an example of financial inclusion and literacy. Even then, in India, the general literacy rate is 77 per cent, but the financial literacy rate is 35 per cent only.
In addition, the United Nations has included financial inclusion and education as an important issue in the United Nations Sustainable Development Goals 2030. In addition, the International Monetary Fund (IMF) and the World Bank are running financial education programs in various developing countries, which will play an effective role in increasing the financial literacy rate.
However, as part of financial inclusion in Bangladesh, Bangladesh Bank has launched various financial inclusion programmes since 2010, including school banking, district-wise school banking conference through lead bank initiative, introducing no-frill bank account, sub-branches, agent outlets, nano loan, digital banking, mobile banking and microfinance activities.
As a result, the total number of MFS users increased to 237.31 million in November 2024. In the same month, the total number of transactions was 652.11 million, while the total amount of money was 1567.87 billion taka. Although the number of active MFS users in the country was only 88.57 million. These progression of financial inclusion activities needed to be capitalised further towards the effectiveness of financial education.
M M Mahbub Hasan is banker and development researcher. mmmahbubhasan111@gmail.com
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