Financial Capability of Educated Middle Class in India — A Study

Financial capability is defined as having the knowledge, understanding, skills, motivation and confidence to take financial decisions which are appropriate to one's personal circumstances. Financial capability can only lead to financial well being. A person's financial capability is best demonstrated by his/her behaviour. Someone can be financially literate without being financially capable. Both developed and developing countries are making continuous efforts to enhance financial capability of their citizens. It is widely believed that strengthening of financial capability would play an important role in increasing levels of financial inclusion, improving efficiency and stability of financial markets, and enhancing welfare outcomes for consumers. US, UK, Canada, Australia, New Zealand, Brazil, Fiji, Eastern Caribbean Currency Union, Ghana, Hungary, Ireland, Malaysia, Singapore, South Africa, Tanzania, Trinidad & Tobago and Kenya have already initiated steps to conduct national level studies on financial capability to identify capability deficits of various segments of their population and vulnerability of selected groups within the population in order to develop comprehensive national strategies for improvement of financial capability of their citizens. India has so far not done any noticeable efforts in this direction. In this paper, the researcher has attempted for the first time to test the financial capability of Indian educated middle class. It has been suggested that the Government of India should initiate steps for undertaking a national level financial capability study of Indian citizens, with special emphasis on financial capability of socio-economically vulnerable groups and initiate appropriate policy interventions to strengthen this capability.