A survey conducted by Standard & Poor’s Ratings Services Global Financial Literacy Survey (S&P Global FinLit Survey) shows that 76% of Indian adults lack financial awareness. “Only 24% of Indian respondents adequately understand key financial concepts, including risk diversification, inflation and compound interest,” finds the report.
The survey was conducted across 140 countries (1,50,000 respondents). They were tested on their knowledge of four financial concepts: numeracy, risk diversification, inflation, compound interest (saving and debt).
According to the survey, three-quarters of Asian respondents and two-thirds of adults worldwide are not financially literate. In comparison, 57% of adults in US and 67% in UK are financially literate. In Asia, Singapore is home to the highest percentage of financially literate adults (59%), followed by Hong Kong and Japan (both at 43%). And less than a third of adults in China (28%) are financially literate.
Responses to the survey questions
(% adults answering correctly)
|
Topic |
India |
BRICS* |
South Asia (excluding India) |
World |
|
Risk diversification |
14 |
28 |
18 |
35 |
|
Inflation |
56 |
46 |
46 |
50 |
|
Interest |
48 |
48 |
46 |
49 |
|
Compound Interest |
44 |
44 |
39 |
45 |
|
Financially literate % |
24 |
28 |
23 |
33 |
*Brazil, Russia, India, China, South Africa
Additionally, the findings reveal that 26% respondents in the richest 60% of the households are financially literate as compared to 20% in the poorest of 40% households.
“Most consumers lack a general understanding of credit, compound interest and other key concepts. Research increasingly shows that saving money is better for development than credit. Yet just 14% adults in India save at a formal financial institution – and their weak financial skills raise questions as to whether they're getting the most out of their money,” finds the report.
