E FINANCIAL LITERACY
(ISSN 00194921)(ISO 9001:2015 Certified)Keb[ / Vol 90 / DebkeÀ / No 04 - अक्तूबर - दिसंबर 2019 October - December 2019FINANCIAL INCLUSION&FINANCIAL LITERACY10 thR. K.TalMem waroriLectu alre
IIBF - PUBLICATION LISTSr.ExaminationNo.1 JAIIB / Diploma inBanking & FinanceEnglishPrinciples & Practices ofBanking2015/Re-printedin 2019M/s Macmillan India Ltd.Price( ) 660/-MediumName of the BookEditionPublished By2JAIIB / Diploma inBanking & FinanceEnglishAccounting & Finance forBankers2015/Re-printedin 2018M/s Macmillan India Ltd. 440/-3JAIIB / Diploma inBanking & FinanceEnglishLegal and RegulatoryAspects of Banking2015/Re-printedin 2018M/s Macmillan India Ltd. 440/-4JAIIB / Diploma inBanking & FinanceHindiBanking ke Sidhanth AvamVyavahar2015M/s TaxmannPublications Pvt. Ltd. 870/-5JAIIB / Diploma inBanking & FinanceHindiBankeron ke liye Lekhankan 2015Avam VittyaM/s TaxmannPublications Pvt. Ltd. 600/-6JAIIB / Diploma inBanking & FinanceHindiBanking ke Vidhik Paksh2015M/s TaxmannPublications Pvt. Ltd. 700/-7CAIIBEnglish2018M/s Macmillan India Ltd. 690/-8CAIIBEnglish2018M/s Macmillan India Ltd. 790/-9CAIIBEnglishAdvanced BankManagementBank FinancialManagementCorporate Banking2018M/s Macmillan India Ltd. 430/-10CAIIBEnglishRural Banking2018M/s Macmillan India Ltd. 500/-11CAIIBEnglishInternational Banking2018M/s Macmillan India Ltd. 400/-12CAIIBEnglishRetail Banking2018M/s Macmillan India Ltd. 500/-13CAIIBEnglishCo-operative Banking2018M/s Macmillan India Ltd. 525/-14CAIIBEnglishFinancial Advising2018M/s Macmillan India Ltd. 375/-15CAIIBEnglish2018M/s Macmillan India Ltd. 600/-16CAIIBEnglishHuman ResourcesManagementInformation Technology2018M/s Macmillan India Ltd. 525/-17CAIIB/CertifiedBanking ComplianceProfessional/CertificateExamination in Risk inFinancial ServicesCAIIBEnglishRisk Management2018M/s Macmillan India Ltd. 725/-EnglishCentral Banking2018M/s Macmillan India Ltd. 450/-1819CAIIB/Certified TreasuryProfessionalEnglishTreasury Management2018M/s Macmillan India Ltd. 600 /-20CAIIBHindiBank Vittiya Prabandhan2012M/s TaxmannPublications Pvt. Ltd. 725/-21CAIIBHindiUnnat Bank Prabandhan2019 985/-22CAIIBHindiKhudra Banking2019M/s TaxmannPublications Pvt. Ltd.M/s TaxmannPublications Pvt. Ltd.23CAIIBHindiVittiya Pramarsh201324CAIIBHindiSuchna Prodhyogiki201325EnglishTrainers, Handbook201326Certified Bank TrainerCourseDigital BankingEnglishDigital Banking201927Banking An IntroductionEnglishBanking An Introduction201528Banking An IntroductionHindiBanking An Introduction(Banking ek Prichay)2016M/s TaxmannPublications Pvt. Ltd. 235/-29Banking Oriented Paperin HindiHindiBanking Oriented Paperin Hindi2013M/s TaxmannPublications Pvt. Ltd. 410/-M/s TaxmannPublications Pvt. Ltd.M/s TaxmannPublications Pvt. Ltd.M/s TaxmannPublications Pvt. Ltd.M/s TaxmannPublications Pvt. Ltd.M/s TaxmannPublications Pvt. Ltd. 670/ 450/ 510/ 425/ 400/ 195/-
CONTENTSFrom the EditorSpecial FeaturesBeyond Risk: Policy making for an Uncertain World-- Sanjeev Sanyal.5Speech delivered on 92nd Annual General Meeting-- V. G. Kannan.11Financial Inclusion, Financial Literacy and the Indian Woman-- Raiba Spurgeon.15Financial Inclusion is only a gateway in the Economic journey-- Lalitha Sitaraman.21The importance of Compliance in Banking-- Rakesh Kaushik.25Study of increasing Digital Banking & Financial TechnologyTrends, Challenges and Opportunities in Indian Banking System-- Dr. Narinder Kumar Bhasin.33Banking: Sailing across the economic downturn-- Gopal Shekhar Jha.45भारत में वित्तीय साक्षरता का प्रसार - रणनीतियाँ-- विजय प्रकाश श्रीवास्तव.कोर बैंकिंग सॉल्यूशन-- सुबह सिंह यादव.Bank QuestHONORARY EDITORIAL ADVISORYBOARDDr. Sharad Kumar5157The views expressed in the articles andother features are the personal opinionsof the authors. The Institute does notaccept any responsibility for them.Dr. Rupa Rege NitsureMr. Mohan N. ShenoiVolume 90, Number : 4October - December - 2019(ISSN 00194921)Dr. Soumya Kanti GhoshHONORARY EDITORDr. J. N. MisraThe Journal of Indian Institute of Banking & FinanceuesKeeW leLee Dev³e j eveeDeeW ceW J³ekeÌle efkeÀS ieSefJe eej uesKekeÀeW kesÀ efvepeer efJe eej nQ uesKekeÀeW ÜejeJ³ekeÌle efkeÀS ieS efJe eejeW kesÀ efueS mebmLeeve efkeÀmeerÒekeÀej mes GÊejoe³eer veneR nesiee October - December 20191
INDIAN INSTITUTE OF BANKING & FINANCEKohinoor City, Commercial-II, Tower-I, 2nd Floor, Kirol Road, Kurla (W), Mumbai - 400 070.E-mail : admin@iibf.org.inWebsite : www.iibf.org.inGOVERNING COUNCIL MEMBERSPRESIDENTRajnish KumarVICE PRESIDENTSShyam SrinivasanMEMBERSMalvika SinhaSmita SandhaneV. G. KannanPallav MahapatraHarideesh Kumar B.K. L. DhingraA. S. RamasastriV. G. MathewG. Siva KumarZarin DaruwalaR. A. Sankara NarayananMukesh Kumar JainAlok Kumar ChoudharyJ. PackirisamyRajkiran Rai G.Ajit RanadeAtul Kumar GoelMANAGEMENTJ. N. Misra, Chief Executive OfficerSudhir M. Galande, Deputy Chief Executive OfficerS. Muralidaran, Director - AcademicsT. C. G. Namboodiri, Director - TrainingS. P. Nair, Director - Member ServicesFrancis Xavier A., Director - OperationsMISSIONThe mission of the Institute is to developprofessionally qualified and competent bankers andfinance professionals primarily through a processof education, training, examination, consultancy /counselling and continuing professional developmentprograms.O³es³emebmLeeve keÀe O³es³e cetueleë efMe#eCe, ÒeefMe#eCe, Hejer#ee,HejeceefMe&lee Deewj efvejblej efJeMes e%elee keÀes yeæ{eves JeeueskeÀe³e& eÀceeW kesÀ Üeje meg³eesi³e Deewj me#ece yeQkeÀjeW leLee efJeÊeefJeMes e%eeW keÀes efJekeÀefmele keÀjvee nw Printed by Dr. J. N. Misra, published by Dr. J. N. Misra, on behalf of Indian Institute of Banking& Finance, and printed at Onlooker Press 16, Sasoon Dock, Colaba, Mumbai-400 005 andpublished at Indian Institute of Banking & Finance, Kohinoor City, Commercial-II, Tower-I, 2ndFloor, Kirol Road, Kurla (W), Mumbai - 400 070. Editor Dr. J. N. Misra.2October - December 2019The Journal of Indian Institute of Banking & Finance
editorial“Poverty is not just a lack of money; it is not having the capability torealize one’s full potential as a human being.”― Dr. Amartya Sen (Awarded Noble Prize in Economic Sciences, 1998)Dr. J. N. MisraChief Executive Officer,IIBF, MumbaiFinancial Inclusion is more of a social issue which needs to be addressed by thecombined efforts of Government, Banks and other financial intermediators. Forachieving Financial Inclusion, Financial Literacy is crucial as Financial Literacy willeventually lead to Financial Inclusion. Acknowledging the relevance of this topic, weare bringing out the present issue of Bank Quest on the theme, “Financial Inclusionand Financial Literacy.”The Institute had organised the 10th R. K. Talwar Memorial Lecture on November 22,2019, which was delivered by Mr. Sanjeev Sanyal, Principal Economic Adviser andCo-chair of G20’s Framework Working Group, Ministry of Finance, Government ofIndia on “Beyond Risk: Policy making for an Uncertain World”. We are including hislecture as the first article of this issue.This issue also carries the 92nd Annual General Meeting (AGM) speech delivered byMr. V. G. Kannan, Member, Governing Council, Indian Institute of Banking & Finance(IIBF) & Chief Executive, Indian Banks’ Association (IBA) on August 23, 2019.The first article on the theme of the Bank Quest is written by Ms. Raiba Spurgeon,Research Officer, State Bank Institute of Consumer Banking, Hyderabad on“Financial Inclusion, Financial Literacy and the Indian Woman”. This article highlightsthe fact that having the access to a financial account is a great start but it does notnecessarily translate into financial inclusion unless the account is used for day-today financial transactions. The author suggests that moving from financial literacy to‘Digital Financial Literacy’ is the ideal step forward for the country in the present dayenvironment.The next article of this issue is on the topic “Financial Inclusion is only a gateway”written by Ms. Lalitha Sitaraman, Former Senior Manager, Indian Overseas Bank.This article deals with the author’s opinion on economic inequalities and providessuggestions to reduce the imbalance.The next article of the issue, “The Importance of Compliance in Banking” ispenned by Mr. Rakesh Kaushik, Faculty IIBF & Former Senior Vice President, SBIFunds Management Pvt. Ltd. This article discusses compliance issues in the lightof guidelines and directions framed by the Reserve Bank of India, the Securities &Exchange Board of India and other Regulators. The author is of the view that theseguidelines should be followed by banks and financial institutions very seriously.The author is of the view that the Board of Directors and the Top Managements ofThe Journal of Indian Institute of Banking & FinanceOctober - December 20193
Banks have to accord top priority to the compliance function and take proper stepsto ensure that the significance of compliance is understood by all officials concernedat all levels.The next article of the issue is on “A Study of Increasing Digital Banking & FinancialTechnology Trends, Challenges and Opportunities in Indian Banking System”authored by Dr. Narinder Kumar Bhasin, Professor, Amity School of InsuranceBanking & Actuarial Science & Former Vice President Axis Bank Limited. This articlegives us an insight about evolution of Digital Banking and discusses the Challengesand Opportunities in Implementation of Digital Banking. The author has also reviewedthe achievements of Payment System Vision 2018 in this article.The next article of this issue is on “Banking: Sailing across the economic downturn”written by Mr. Gopal Shekhar Jha, Faculty, Baroda Academy-SPBT College, Bank ofBaroda. According to the author, the economy is witnessing shifts in business models,financial requirements and service quality expectations of customers. The changingecosystem necessitates banks to offer innovative products, easily accessible deliverychannels along with real time monitoring.We are also carrying two articles written in Hindi in this issue. The first Hindi articleis written by Mr. Vijay Prakash Srivastava, Faculty, Institute of Banking PersonnelSelection on “भारत में वित्तीय साक्षरता का प्रसार - रणनीतियाँ ”.The next article in Hindi is written by Mr. Subah Singh Yadav, Former AssistantGeneral Manager, Bank of Baroda on कोर बैंकिंग सॉल्यूशन.I am also happy to share with you that the Institute’s quarterly journal, “Bank Quest”has been included in Group B of the UGC CARE list of Journals.The year 2019 has also been an eventful year for IIBF where the Institute has takenseveral initiatives to bring excellent services for its members and Banking & Financefraternity at large.I wish you all a very Happy & a Prosperous New Year!Dr. J. N. Misra4October - December 2019The Journal of Indian Institute of Banking & Finance
10th R. K. TalwarMemorial LectureBeyond Risk: Policy making for anUncertain World1*1 Sanjeev SanyalLadies and Gentleman, it is an honor to deliver theR. K. Talwar Memorial Lecture. The late Raj KumarTalwar is one of the most distinguished bankersin the history of Independent India. He was born in1922 and joined the Imperial Bank of India in Lahorein November 1943 as a Probationary Assistant. Hewould rise through the ranks to head the institution,now known as State Bank of India, in 1969.As the Chairman of State Bank of India, he managedIndia’s largest bank during particularly turbulenttimes. I am sure he would have thought a greatdeal about the issues that I am about to highlight inthis lecture. In particular, he would have wonderedabout the problem of navigating through the fluiduncertainty of a world buffeted by unpredictableshocks, unintended consequences, butterfly effects,and unknowable interlinkages. Note that this is abouthow to deal with “unknown unknowns” and “knownunknowables”. As we shall see, this is quite differentfrom the problem of dealing with known or quantifiablerisks. As economist Frank Knight famously put it:“Uncertainty must be taken in a sense radicallydistinct from the familiar notion of Risk, from whichit has never been properly separated.” This lecture isabout how policies and regulations for dealing withUncertainty are fundamentally different from thoserequired for dealing with Risk.The issue of dealing with financial sectorvulnerabilities has long been a central theme ineconomic policymaking. The “panics”, bank failuresand financial crises of the 19th and 20th century led tothe evolution of key institutions such as central banksas well as a large body of regulations and policiesmeant to avert and mitigate the impact of financialsystem breakdowns. Although central banks, financeministries and international organizations did learnfrom each other, most of the regulatory and policyframeworks were national till the nineteen-eighties.In 1988, an internationally accepted framework wasadopted that demanded some minimum standardsto be met by banks (instead of the patchwork ofnational regulatory frameworks). Now known asBasel I, it introduced the concept of regulatory capitalthat is aligned to a bank’s balance sheet - Capital toRisk Weighted Assets Ratio (CRAR). This approachwas further enhanced by Basel II norms introducedin 2004 that demanded greater granulation of risksfaced by a bank’s balance-sheet. Capital chargeswere made for credit risk, market risk and operationalrisk. However, the Global Financial Crisis of 200708 exposed the inadequacies of the approach. Inresponse, a new and more demanding set of normswere adopted in 2010. Known as Basel III, most ofthese capital requirements have been implementedin phases in India since April 2013.Basel III norms did not merely introduce more stringentquality and quantity requirements for regulatorycapital, it made several innovations. For instance, itPrincipal Economic Adviser and Co-chair of G20’s Framework Working Group, Ministry of Finance, Government of India.*The author is grateful to Dr. Krishnamurthy Subramanian, Chief Economic Adviser, for his comments and suggestions. He would also liketo thank his research team of Arpitha Bykere, Mahima and Aakanksha Arora for their valuable inputs.1The Journal of Indian Institute of Banking & FinanceOctober - December 20195
introduced an additional layer of common equity - thecapital conservation buffer - as well as introduced aleverage ratio that required banks to have a minimumlevel of loss-absorbing capital relative to all of thebanks’ assets irrespective of risk weighting. Anotherinnovation was to take into account system-widerisks. Known as “Macro-prudential norms”, BaselIII imposed additional requirements on systemicallyimportant banks as well as a counter-cyclical capitalbuffer that is meant to balance out credit cycles(although the exact working of this approach is yetto be tested).It is fair to say that the roll out of the Basel III normshave led to a more systematic approach to risk-takingby banks internationally and have forced them tobecome better capitalized. In India, the roll out ofthe Basel III norms since 2013, in a phased manner,coincided with the introduction of the Insolvency andBankruptcy Code in 2016 as well as the imposition ofmuch more stringent asset quality recognition. Whilethese changes did cause disruptions in the widereconomy, the Indian banking system is arguablyhealthier today than it was at the beginning of thedecade.This audience will be familiar with the story thus farbut I am now going to wade into trickier issues. It maynot be obvious, but the general philosophical basisof the Basel approach is that risks faced by banksare generally known or at least quantifiable. This iswhy it prescriptively assigns risk weights to classes ofassets. As pointed by Anat Admati and Martin Hellwig(2015), “the system of risk weights we currently havehas more to do with politics and tradition than withscience”. For instance, home country sovereign debtenjoys zero risk-weight but the Greek default of 2012demonstrated clearly the flaw in this thinking. Evenwhen Basel III allows for external assessment of risk, itpresumes that it is only a matter of encouraging credit6October - December 2019analysts in rating agencies to work out the probabilityof default. The belief is that it is mostly a matter ofadequately incentivized rating agencies to delve everdeeper into balance-sheets and create even moreelaborate excel-sheet models.The problem is that financial systems are not merelysubject to known and quantifiable risks but to the pureuncertainty of “unknown unknowns” and of “knownunknowables”. The former derives from geopolitical,political, technological, economic, and other shocksthat simply cannot be predicted or quantified in anymeaningful way. The latter is related to factors thatcannot be resolved due to inherent information gapsand asymmetries (for instance, the “moral hazard”problem of monitoring management behavior).Moreover, note that all the above factors interact witheach other in multiple, non-linear ways. Second andthird-order feedback loops result in complex andunpredictable evolution of outcomes.Financial systems are complex adaptive systems thatare constantly evolving in an unpredictable world. Thisis just as much a world of indeterminable uncertaintyas of quantifiable risk. The introduction of rigid andprescriptive regulations aimed only at risks are notmerely inadequate but may have harmful unintendedconsequences from an uncertainty managementperspective. For instance, one can argue that suddengrowth of “shadow banking” across the world is partlydue to the imposition of stricter norms on banks. Theresult is that financial sector vulnerability has simplyshifted to the unregulated part of the system. Thisis not to argue that Basel III should be rolled back,but to point out that the current approach has itslimits. Rather than stumble into ever more stringentregulations, perhaps the time has come to take awider view of the matter. The following is a list of someof the issues that need to be considered:The Journal of Indian Institute of Banking & Finance
1)2)Supervision versus Regulation: There has beena tendency to treat regulation and supervisionas being broadly the same thing or at leastsubstitutes. However, there is a big differencebetween the rule bound approach of regulationand the business of active supervision. In afluid and unpredictable world, we need to takethe latter just as seriously. Yet, the emphasisworldwide has been almost entirely on regulationeven though the norms were set up by a groupironically called the Basel Committee on BankingSupervision. For instance, almost all the bankingsector scandals in India of the last coupleof years were due to failures of supervision,and not due to lack of regulations. Even moreregulation would not have averted the problems.One could argue, of course, that we need moreof both but we need to be careful here. Therewill always be limited resources and we doneed to think about trade-offs. Indeed, evermore regulations can shift attention to mindlessbox ticking and make the financial system rigidand opaque. Perhaps the time has come todiscuss the institutional capacity and incentivesof regulators rather than the imposition of morestringent rules. This rea
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Traditionally, Literacy means the ability to read and write. But there seems to be various types of literacy. Such as audiovisual literacy, print literacy, computer literacy, media literacy, web literacy, technical literacy, functional literacy, library literacy and information literacy etc. Nominal and active literacy too focuses on
guidance on how to prepare interviewers to undertake the survey. 3 Available at www.financial-education.org. Measuring Financial Literacy: Questionnaire and Guidance Notes 6 METHODOLOGY The Financial Literacy Questionnaire can be used to collect information about financial literacy within a country, and to compare levels of financial literacy .
The study established that financial literacy had influence on financial access transaction costs and performance of micro-enterprises. The paper advance the argument and theoretical perspective that entrepreneur financial literacy is a major determinant of micro enterprise performance. Keywords: entrepreneur financial literacy, financial
Part VII. LIteracy 509 Chapter 16. A Primer on Literacy Assessment 511 Language Disorders and Literacy Problems 512 Emergent Literacy 514 Emergent Literacy Skill Acquisition 516 Assessment of Emergent Literacy Skills 520 Assessment of Reading and Writing 528 Integrated Language and Literacy Skill Assessment 536 Chapter Summary 537
Financial Empowerment 2 Financial education –strategy that provides people with financial knowledge, skills and resources Financial education builds an individual’s knowledge, skills and capacity to use resources and tools, including financial products and services leading to Financial Literacy Financial empowerment includes financial education and financial literacy –focuses .
Financial literacy and use of technology at individual and firm level has a tendency of bolstering each other. In [7 ], 8 embedding use of technology as a construct in financial literacy studies verify its noteworthy impact on firm financial practices and performance. At firm level the concept of financial literacy has been shown to have
Learning Pathways in Literacy P a g e 2 Early Literacy Pathways 2 Learning Pathways in Literacy A comprehensive document on Early Literacy Development: From Foundational Communication to Advanced Thinking, Reading and Writing Why we created this document The Early Literacy Pathway was created to support educators, caregivers and
I. Literacy for the 21st Century 5 Literacy for the 21st Century / New Ways of Learning 6 What a Difference a Century Makes! 8 Why Media Literacy is Important 9 Questioning the Media 10 II. The CML MediaLit Kit 11A Framework for Learning and Teaching in a Media Age Media Literacy: From Theory to Practice to Implementation 12
