Survey finds 76% of Indian adults not well verse with basic financial concepts

A survey conducted by Standard & Poor’s Ratings Services found that 76 percent of Indian adults do not adequately understand key financial concepts. This global survey results come following interviews of more than 150,000 adults across over 140 countries. Individuals were tested based on their knowledge of four basic financial concepts: numeracy, risk diversification, inflation, compound interest (saving and debt). As per the survey, financial literacy amongst Indians is lower than the worldwide average, almost in lines with BRICS and South Asian nations. The key findings of the survey shows: 1) In India, 26 percent of adults in the richest 60 percent of households are financially literate, compared to 20 percent of adults in the poorest 40 percent of households. Worldwide, 36 percent of adults in relatively richer households and 27 percent of adults in relatively poorer households are financially literate. 2) Indians have very poor knowledge regarding the compound interest personal finance concept as well. Poor Indian adults were 21 percentage points less likely than richer Indian adults to correctly answer the compound interest topic correctly. With regard to interest, the gap is 11 percentage points. 3) 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. In short survey shows that most consumers lack a general understanding of credit, compound interest and other key concepts. Other countries’ results are much better than India, for instance 57 percent of adults in US and 67 percent in UK are financially literate. While Singapore shows highest percentage of financial literacy of 59 percent, closely followed by Hong Kong and Japan (both at 43 percent) In short, Indians really suck when it comes to financial literacy.