About 76% of Indian adults do not adequately understand key financial concepts, including risk diversification, inflation and compound interest. This is lower than the worldwide average of financial literacy, but roughly in line with other BRICS and South Asian nations, according to the Standard & Poor’s Ratings services global financial literacy survey.
1) Only 14% of Indian adults correctly answered the question on risk diversification. Conversely, 56% answered the inflation – question correctly.
2) About 39% of the adults who had borrowed formal loans are financially literate, while about 27% of formal loan borrowing adults were not.
3) 26% of the adults in the richest 60% of households are financially literate, while 20% of the poorest 40% of households are financially literate.
4) The income gap is evident when the survey is broken down by concept – Poor adults are 21 percentage points less likely than richer adults to correctly answer the compound interest topic correctly. With regard to interest, the gap is 11 percentage points.
5) 38 percent of adults with tertiary education are financially literate; compared to 30 percent of adults with secondary education, and 18 percent of adults with primary education.
Interestingly, the survey also found a gender divide – 73% Indian men are not financially literate while 80% Indian women are not financially literate. India beats the 5 point worldwide gender gap. Among other countries, 57% of the adults in the US are financially literate; while in the UK 67% of the adults are financially literate.
In Asia, Singapore is home to the highest percentage of financially literate adults (59 percent), followed by Hong Kong and Japan (both at 43 percent). And less than a third of adults in China (28 percent) are financially literate