CHAPTER 1- INTRODUCTION

1.1 Introduction …………..2page

1.2 Objectives…………….. 4 points
1.3 Need and Importance of study…..half para
1.4 Scope of the study
1.5 Limitation of study……5-6 points

CHAPTER 2- CONCEPTUALIZING FINANACIAL LITERACY

2.1 Finanacial literacy Background…………….1page

2.2 Financial literacy Defintion……………. 1 page
2.3 Finanacial literacy Development………… 1 page

CHAPTER 3-LITERATURE REVIEW AND PREVIOUS

STUDIES………………………….3 pages

CHAPTER 4- STUDY METHODOLOGY AND RESULTS

4.1 Study methodology

4.2 The population of the study
4.3 The sample of the study
4.4 Data collection Methods
4.5 Statistical techniques
CHAPTER 5- FINDINGS AND DATA ANALYSIS

CHAPTER 6- CONCLUSION,
SUGGESTIONS,
REFERENCE
INTRODUCTION

Recently, Financial literacy has given great attention, as it is considered the key
driver of the positive financial behaviour. Researches on financial literacy
approves that many factors such as socio-demographic characteristics, experience
and social capital may affect on individual’s financial literacy. Financial skills
plays an influential role in the investment decisions, retirement
planning ,investment style, savings, borrowing and repayment decisions of
individuals.

Financial literacy is the ability to make informed judgments and to take effective
decisions regarding the use and management of money. It enables individuals to
improve their overall wellbeing and to plan for their future security. This includes
the way income and expenditure are managed and the ability to use the common
methods of exchanging and managing money. Further, financial literacy
incorporates an understanding of everyday situations that need to be understood
such as insurance, credit and an appreciation of savings and borrowings. The
understanding of financial terms and concepts includes an understanding of key
financial concepts central to investing and managing funds to increase wealth and
security. Individuals requires an awareness of features available for borrowing and
investing.

Financial literacy influences how people save, borrow, invest and manage their
financial affairs. It therefore affects their capacity to grow their wealth and income,
and has significant implications for people’s lifestyle choices. Financial literacy
also has a significant part to play in influencing financial institutions. Because
financial literacy influences people’s investment decision, it also affects how
resources in the economy are allocated. It helps individuals to improve their level
of understanding of financial matters which enables them to process financial
information and make informed decisions about personal finance. Financial
literacy is directly related to the well-being of individuals. Having financial
literacy skills is an essential basis for both avoiding and solving financial
problems, which, in turn, are vital to living a prospectus, healthy and happy life.
Financial behaviour is the most obvious evidence of having financial literacy,in
which it is clear that people who less financially literate found to be less likely to
save,plan for retirement or participate in finanacial market, as a result people who
possess higher financial literacy have better financial outcomes and efficient
decisions.Although, the family background,social and demographic features has
influential role in improving individual financial literacy.
The Financial literacy is very low around the world, irrespective with the market
development while many studies find that most of the people neither understand
the basic financial concept nor perform simple calculations. The real financial
literacy mostly examining two dimensions understanding the financial knowledge
and applying it in daily financial practices.

OBJECTIVES OF THE STUDY

The main objective of the study aims to achieve the followings:
 Identify the level of financial literacy in commerce graduates.
 Identify the relationship between financial behaviour and financial literacy.
 Identify the impact of socio demographic characteristics, family
background,experience ,communication and social network on student’s
financial literacy.
 To offer finding and suggestions of the study.

NEED AND IMPORTANCE OF STUDY

Financial literacy is considered an important adjunct in the promotion of financial

inclusions and ultimately financial stability. College students learn not only the
subject but also things which are needed for the survival of the better life. To run
their life in a better way they should possess knowledge about the management of
finance.Financial literacy is helpful to the students to schedule their daily expenses,
plan to save their surplus pocket money, procedure to avail and repay educational
loans and giving sound bases for tomorrow’s investment pattern. With the
increasing cost of a college education students find themselves in precarious fiscal
situations. Most students can’t open a savings account which is meant for tuition
fees, books and other educational expenses. Due to unaware of financial
management, people feel about how they are going to support themselves and their
families while enrolled in higher education. Government and the commercial banks
are providing financial assistance to the students for successfully complete the
education. Even though, most of the students are facing several unique
financial problems due to lack of financial knowledge.
Even the students in commercial field, pass through the basic concept of finance as
a part of their subject,but it is not evident that how many of them have a thorough
knowledge and skills in managing finance.
SCOPE OF THE STUDY

The aim of the study is to find out the financial literacy level among the commerce
graduates students. The study cover five arts and science college students in the
chengannur which is one of the leading educational colleges in Alapuzha district.

LIMITATION OF THE STUDY

 This study is confined only to commerce graduate students.

 This study covers only five arts and science colleges in alapuzha district
 The result of the study cannot be generalize because the sample is
relatively small and limited
 The study is only conducted among the commerce students
 Limitation 6

CHAPTER 2
CONCEPTUALIZING FINANCIAL LITERACY
Background of Financial literacy in India.

Background of Financial literacy in India.

In India, a large number stakeholders including financial regulators, financial institutions,

educationists and other agencies are involved in spreading financial literacy. Efforts are continuously
been made so aa to improve the level of financial literacy in India. According to global survey, about
a staggering 76%of India adult do not understand basic financial concepts and are unfortunately
financially literate even today. The survey conforms the financial literacy rate in India has been
consistently poor as compared to the rate of the world.

Financial literacy has become one of the top priorities for most of the countries today as it is directly
proportional to the economic growth of the country. It is alarming to know that the financial literacy
rate in India is way behind other countries. According to global survey, India is home to almost 20%of
the world’s population, however, 76%of its adult population is not even aware of the basic fiancial
concepts.

Financial literacy refers to skills and knowledge with regard to make informed choices to manage
resources and income. Basically its capacity to have a solid financial plan. Most survey show that
Financial literacy is still poor in India . Over two -third of the population, is not financially literate.
People lack financial planning basics. The standard and poor survey from 2014 found that over 76%of
adults in India didn’t comprehend fiancial planning basics .

Fiancial literacy in India, there is tremendous inter-state difference within India itself. A
nationally representative data- set with an index of fiancial literacy representing fiancial knowledge,
behavior and attitude demonstrated over 60&pointe variation between an Indian state with the
highest fiancial literacy and one with the lowest, statistical analysis showed that these differences in
fiancial planning basic correlated to differences in gender, qualification, location, employment,
technology survey and current debt. An ING survey found that Indians ranked number 2 in across 10
leading countries assessed on fiancial literacy levels. But going into the data it was found that this was
linked to the basic Indian those so save and invest in ream estate and gold. However, growing
dependence on credit cards and access to a variety of personal loans as well as a heavy EMI burden
are affecting the success of the fiancial plan of the salaried classes

 In India, a large number stakeholders including financial regulators, financial institutions,

educationists and other agencies are involved in spreading financial literacy. Efforts are
continuously been made so aa to improve the level of financial literacy in India. According to
global survey, about a staggering 76%of India adult do not understand basic financial concepts
and are unfortunately financially literate even today. The survey conforms the financial
literacy rate in India has been consistently poor as compared to the rate of the world.

Financial literacy has become one of the top priorities for most of the countries today as it is
FINANCIAL LITERACY DEFINITION

“OCED defines financial literacy as a combination of financial awareness, knowledge skills

attitude and behavior necessary to make sound financial decision and ultimately achieve
individual financial wellbeing. People achieve financial literacy through a process of
financial education”.OCED defines financial education as “the process by which financial
consumers/ investors improve their understanding of financial products, concepts and risks
and through information , instruction and/or objective advice, develop the skills and
Confidences to become more aware of financial risk and opportunities to make informed
choices to know where to go for help and to take other effective action to improve their
financial wel-Being”.

The literal definition of financial literacy is understanding the topic of money. Financial
literacy represents one are of financial wellness. However, It takes more than financial
literacy to make a meaningful difference in people’s lives. It takes a focus on behaviors,
systems, sentiment, and making regular adjustments based on outcomes.

Financial literacy helps improve a person’s confidence, sentiment and may help them make
better decisions. However financial literacy alone does not guarantee financial security.
That is the way the NFEC’s focus is on all aspects of a person’s financials :literacy,
sentiment, behaviors, systems and planning.

The National Financial Educators Councils financial literacy definition also adds in a
psychological component. The NFEC’s advisory board, comprised of financial professionals
and seasoned educators, feel this is a critical component. The NFEC states “A lot of people
know what they should do: however a good majority freeze up when it comes time to make
a financial decision. Most have the knowledge but lack the confidence to make the right
decision and take action on a decisive manner. Since money is directly tied to peoples
emotional state we feel including this component in our financial literacy definition is
critical “

The concept is applicable to both individuals and organizations. Individuals must be able to
balance a checkbook. Comprehend personal income taxes and understand the concept of
budgeting in order to make wise decisions with money. These skills are vitally important ;
yet many individuals lack this basic knowledge and consequently are unable to meet their
daily expenses. Business on the other hand, must have management who understands
financial statements, production schedules, cost sheets and many other types of reports in
order to make decisions about the future of the company.

Financial literacy is the ability to understand how. Money works in our day today functions
and how some one manages it. How he/she invest it and how a person offers into others.
More specifically, it refers to the set of skills and knowledge that allows and individual to
make informed and effective decisions with all of their financial resources. Financial
inclusion and financial literacy are twin pillars while financial inclusion acts from supply
side providing the financial Market/services what people demand. Financial literacy
Stimulates the demand side-making people aware of what they can demand. Financial
literacy is the ability to understand and effectively apply various financial skills, including
 personal financial management, budgeting and investing. Financial literacy helps
individuals become self-sufficient so that they can achieve financial stability. Financial
literacy also involves the proficiency of financial principles and concepts, such as financial
planning, compound interest, managing debt, profitable sawing’s techniques, and the time
value of money, The lack of financial literacy may lead to making poor financial choices that
can have negative consequences on the financial well-being of an individual. Consequently
the federal government created the financial literacy and education commission which
provides resources for people who want to learn more about financial literacy.

The main steps to achieving financial literacy include learning and skills to create a budget
the ability to trade spending, learning the techniques to pay off debt, and effectively
planning for retirement. These steps can also include counseling from a financial expert.
Education about the topic involves understanding how money works, creating and
achieving financial goals, and managing internal and external financial challenges.

Financial illiteracy affects all ages and all socioeconomic levels. Financial illiteracy causes
many people to become victims of predatory lending subprime mortgages, fraud and high
interest rates, potentially resulting in bad credit bank ruptay or foreclosure.

Defining a concept is almost always difficult, because of the content itself and the diversity
of opinion. It is even more difficult when we do not operate with the same words and
meanings and this is the case for the system “financial literacy “which incorporates
knowledge, education, ability, competence and responsibility at the same time. The focus is
either on knowledge or on the ability of using the knowledge and even peoples self -
confidence towards their own financial actions.

College presents a unique time in a young person’s life where financial literacy education is
particularly important. Our resources for college students cover a number of important topics
faced by young people who may be living on their, own for the first time.
FINANCIAL LITERACY INITIATIVES IN INDIA
V FINACIAL LITERACY INITIATIVES IN INDIA

(A) Initiatives Taken by RBI’s on Initiatives Financial Education

Reserve Bank of India’s developmental role includes financial inclusion and financial education.
Towards this RBI as produced many comics, handbooks, booklets etc. Which are available on it’s
website in nearly 13 languages so that banks and other participants can download and use it to spread
information and aware the public about financial products and services.
In a move to provide elementary financial literacy information to general public RBI as designed the
booklet FAME (financial awareness messages).FAME Contains financial awareness messages,such as,
documents needed to be submitted while opening a bank account(kyc) important of budgecting,saving
and responsible borrowing,maintain credit worthiness ,a credit score and by repaying loans on time
doorstep banking and localized banking process of loading complaints at the bank and the banking
ombudsman,usage of electronic transfers capitalizing money in registered entities’ etc.

Audiovisuals have also been produced to create awareness on the topic like “Basic Financial Literacy” ,
” Unified payments interface” and “Going digital”. The pictorial booklet series of reserve bank named
‘Raju’ and ‘Mani Kumar’ where also effective once. the booklets ‘Raju’ thought about banking concepts
and savings habits and the Mani Kumar clarified the role and function of the reverse bank of India.

The project titled “Project Financial literacy” is also instrumental to the financial literacy program of RBI
the objective of this project is aimed to disseminate information regarding RBI and universal banking
concepts to various target group. Apart from this RBI also organised townhall and out reach visits in
which all the top executives take part disseminate information about economy, banking and RBI it also
arranges visits of school and college students to RBI to known and understand its function.

(B)Initiatives taken by SEBI on Financial Education

The Securities Exchange Board of INDIA has Undertaken Financial Education

Programmers through a nationwide campaign. SEBI has established National Institute of securities
Market(NISM) which introduced ‘School for Investor Education and Financial literacy’ to boost financial
skill in individuals from all walks of life.NISM also conducts Investors Education programme since
2014.NISM conducts Financial literacy quizzes and pocket money financial literacy programmes in
schools every year.

SEBI has appointed Resource persons ,who are trained and equipped with the knowledge of financial
markets for conducting investor awareness programmes all over the country.They are appointed to
impart financial markets for conducting investor awareness programmes all over the country.they are
appointed to impart financial education to people at various sections of the society.SEBI also seek the
help of intermediaries financial market like stock exchanges,depositories,Association of Mutual funds in
India,Association of merchant Bankers of India,etc.
Through ‘VISIT SEBI’ programme, students from various educational institutions are encouraged to visit
SEBI and understand its operations. SEBI has set up SEBI helpline and SCORES (SEBI Online Complaint
Redresses system) through which investors across the country could file complaints and get their
grievances steeled.

(c)Initiatives taken by IRDA on Financial Education

The Insurance Regulatory and Development Authority has also taken a number of initiatives in the field
of financial literacy.Awareness programmes have been organised regularly to convey about the rights
and duties of policyholders, mechanism available for dispute and grievance redressal etc. Through
National Strategy for Financial Education(NSFE). These messages have been dispersed all over the
country in different indian languages through various channels of communication like TV, radio,print
media etc. IRDAI has also participated in the “JAGO GRAHAK JAGO” Programme of Ministry of
consumer Affaris,Food and public Distribution, Government of India,which aims to educate consumers.
IRDA’S insurance awareness campaign ‘Bima Bemisael’is the consumer education initiative with the
tagline “promoting consumer education initiative with the tagline “promoting Insurance protecting
Insured”which creates awareness about insurance among the general public central of grievances has
been created by IRDA,named Integrated Grievance Management system(IGMS)which facilities
registrations of policyholders complaints and help them continuously track its progress.

To improve on its strategy of creating insurance awareness IRDA has done ainsurance which was
carried out through the NCAER.IRDA SPONSORS many seminars on insurances and organises seminars
on policyholder protection and welfare.like RBI,IRDA has published ‘policyholder Handbooks ‘and comic
book series on insurance…..IRDA has also launched the website www.policyholder.gov.in for education
of policyholders.

(D)NCFE National council of Financial Education-A collective effort of RBI ,SEBI,IRDA

National Center for Financial Education (NCFE)is established with the support of financial sector
regulator’s i.e.Reserve Bank of India (RBI),Securities and exchange board of India(SEBI), Insurance
Regulatory
and Development Authority(PREDA) and forward markets
commission(FMC), to enhance financial literacy and financial inclusion in india.

NCFE conducts National FINANCIAL Literacy Assessment Test(NELAT) EVERY

YEAR TARGETED TOWARDS STUDENTS OF CLASSES 7 TO 10. THIS TEST HELPS STUDENTS TO ACQUIRE
FINANCIAL KNOWLEDGE DURING SCHOOLINITSELF.

NCFE has initiated FETP FOR PROVIDING UNBAISED PERSONAL FINANCIAL EDUCATION TO PEOPLE AND
ORGANIZATION FOR IMPROVINGNG financial
education to people and organizations for improving financial literacy in the country. The program is
based on two pillars; education and awareness, the major objective of which is to established a
sustainable financial literacy movement

(2)Commercial banks

The role of banks is important as banks are the pillars of financial market. Commerical banks have
initiated various measures for creating awareness about products through counselling centres and
rural self-employment training institutes on financial literacy. The objectives of these centre’s is to
advise people on gaining access to the financial system including banks, creating awareness among the
public about financial management,counselling people who are struggling to meet their problems of
indebtedness,helping in rehabilitations of borrowers in discreet etc.

(5)PFRDA Initiatives on financial education The pension Fund

Regulatory and development Authority,India’s youngest regulator has been engaged in spreading social
security messages to the public.PFRDA has developed FAQ on pension related topics on its web, and
has been associated with the various non-government organizations in india in taking the pension
services to the disadvantaged community.PFRDA’S initiatives have become more broad-based with
direct mass publicity on NPS-both individuals model through pops and groups models through
Aggregators.PFRDA has issued advertisements in print media and electronic media through radio and
television.PFRDA appointed intermediaries are called Aggregators who are directly responsible for
pension awareness mostly in vernacular languages and line with socio-economic sensibilities.
Chapter 3
Literature review and previous studies
directly proportional to the economic growth of the country. It is alarming to know that the financial
literacy rate in India is way behind other countries. According to global survey, India is home to almost
20%of the world’s population, however, 76%of its adult population is not even aware of the basic
fiancial concepts.

Financial literacy refers to skills and knowledge with regard to make informed choices to manage
resources and income. Basically its capacity to have a solid financial plan. Most survey show that
Financial literacy is still poor in India . Over two -third of the population, is not financially literate.
People lack financial planning basics. The standard and poor survey from 2014 found that over 76%of
adults in India didn’t comprehend fiancial planning basics .

Fiancial literacy in India, there is tremendous inter-state difference within India itself. A
nationally representative data- set with an index of fiancial literacy representing fiancial knowledge,
behavior and attitude demonstrated over 60&pointe variation between an Indian state with the
highest fiancial literacy and one with the lowest, statistical analysis showed that these differences in
fiancial planning basic correlated to differences in gender, qualification, location, employment,
technology survey and current debt. An ING survey found that Indians ranked number 2 in across 10
leading countries assessed on fiancial literacy levels. But going into the data it was found that this was
linked to the basic Indian those so save and invest in ream estate and gold. However, growing
dependence on credit cards and access to a variety of personal loans as well as a heavy EMI burden
are affecting the success of the fiancial plan of the salaried classes