Financial literacy must for inclusive growth: Chidambaram

Mumbai, July 20 (UNI) The spread of financial literacy is a must among all classes of society so as to achieve inclusive growth, said Union Finance Minister P Chidambaram here today.

Delivering the special public lecture on ''Financial literacy'' at the Mumbai University in Kalina campus, Mr Chidambaram advocated the idea for starting financial literacy course at the higher secondary level.

''The process of inclusive growth will be strengthened if more individuals participate in the financial market. The spread of financial literacy will increase such participation,'' he said.

The poor level of financial literacy can be easily demonstrated by the fact that only 60 per cent of urban households have a bank account and only 40 per cent of rural households have a bank account. Citing an instance of how financial illiteracy was affecting the masses, he said, ''The poor are forced to borrow, and they do so from money lenders who charge them high rates of interest. It is the money lender who is financially literate for he knows the power of compounding, not the poor borrower.'' He added that while poverty is certainly a factor that inhibits the spread of financial literacy, there is no evidence that those who are not poor are financially literate.

Finance Minister expressed concern about market pundits who he termed as ''the new breed of market players called financial advisors.'' ''Owing to low financial literacy, investors are unable to distinguish between poor and good quality advice resulting in wrong investments,'' he added.

UNI