Directions (1-10): Read the following passage carefully and answer the questions given after the passage. Certain words/phrases have been printed in bold to help you locate them while answering some of the questions.
Small savers in the country have been falling prey to financial scams with alarming regularity. And try as they might, our financial regulators have been ineffectual at protecting them. A key reason is the lack of basic financial literacy. A recent global survey of 1,50,000 adults across 140 countries by Standard & Poor’s Ratings Services has shed new light on just how widespread this problem is in India. The results are quite disheartening.
The survey showed that 76 per cent of Indians aren’t financially literate, going by their inability to answer very basic questions on risk, inflation, and simple and compound interest. The prevalence of financial illiteracy in India was not just higher than the world average (66 per cent), it was also higher than every other BRIC nation. The country has a wide gender gap in financial literacy (while 27 per cent of the men made the cut, only 20 per cent of the women did). However, rich households (26 per cent were literate) didn’t fare much better than poor ones (20 per cent). These findings show that all the time, money and effort regulators have expended on investor awareness and education initiatives haven’t been very effective. Such initiatives have not been constrained by a lack of funds. Copious amounts of money flow into the investor protection funds maintained by the two stock exchanges, thanks to mandatory contributions from trading members. The ministry of corporate affairs appropriates all unclaimed dividends from listed companies for its own investor education initiatives, while RBI does the same with unclaimed bank deposits. SEBI, which has been slapping market offenders with huge penalties, deposits these into an investor protection fund. All this is apart from the mandatory 0.02 per cent of assets that mutual funds are required to spend on investor awareness programmes and the scores of voluntary camps conducted by other players. But the key problem with most of these initiatives is that they don’t deliver basic financial literacy at the grassroots level. Camps from financial firms, for instance, inevitably focus on convincing affluent urban savers to try out insurance policies, systematic investment plans or equities in place of conventional instruments. What we need, instead, is a serious effort at creating content that can integrate basic financial concepts such as inflation, risk and interest rates, for instance, into the school curriculum.
Another interesting finding of the S&P survey is that people who already have access to products such as bank accounts and bank loans, even if poor, have a far better understanding of financial concepts than those who don’t. This is a clear message that a critical piece in ensuring universal financial literacy is to make sure that no Indian citizen is denied basic access to regulated savings or credit products. So, financial inclusion initiatives such as the Jan Dhan Yojana or the Jan Suraksha Yojana, far from putting the cart before the horse, are just what small savers need to escape the clutches of Ponzi scheme operators and moneylenders.
Source – The Hindu
1. According to the passage what is reason for finacially illteracy in India?
a. Lack of financial awareness
b. Lack of literacy among people
c. Lack of RBI’s initiative at grassroot level
d. Both a & b
e. None of these
2. What can be the suitable title of the above passage?
a. Lessons on literacy
b. Financial Awareness
c. India’s poor financial literacy
d. Education initiatives
e. Weak financial system
3. What is NOT TRUE according to the passage?
I. Financial initiatives are contrary to a conventional efforts
II. Lack of money in the investor protection fund
III. Less than 50 percent people are financial literate
a. II only
b. II and III
d. I & III
e. All of the above
4. According to S&P’s report what is true?
a. Poor people who hold accounts in banks have better understanding of financial terms.
b. Poor People are more literate than rich ones.
c. 76 percent of indians are financial literate.
d. Both b & c
e. None of these
5. What is the key reason that most of the initiatives are facing today?
a. Lack of money flow
b. Lack of basic financial literacy
c. Lack of basic access to savings
d. None of these
e. All of the above
Directions (6 to 8): Choose the word which is most similar in meaning of the word printed in bold as used in the passage.
Directions (9 to 10): Choose the word which is most OPPOSITE in meaning of the word printed in bold as used in the passage.