AUTHOR DETAILS
| Author Abdul Aahad Sadiq | Affiliation Department of Commerce, Shri Ram College of Commerce, Delhi-110007, India |
| Corresponding Author Email aahadsadiq35@gmail.com | Publication Date 11/02/2026 |
ABSTRACT
In contemporary India, financial literacy has emerged as a key determinant of household financial well-being, yet more than 76% of Indian adults are considered financially uneducated. This study assesses the effectiveness of community-based financial literacy programmes in improving financial awareness and household financial behaviour. Using a secondary data-based descriptive and analytical approach, the study synthesises evidence from academic literature, institutional reports, and policy documents. The analysis finds that community-based programmes — particularly those delivered through Self-Help Groups (SHGs) and Financial Literacy Centres — are effective in improving basic financial awareness and facilitating initial engagement with formal financial systems. Beneficiaries of structured interventions achieve an overall financial literacy score of 43.39%, compared to 32.19% for non-beneficiaries. However, a persistent awareness-behaviour gap remains: while 42% of individuals report awareness of financial literacy programmes, only 26.7% meet the minimum threshold for sound financial behaviour and attitude. The study concludes that financial literacy functions more as an enabling condition than a direct determinant of household financial behaviour, and that sustained institutional support, programme continuity, and integration with broader financial inclusion efforts are essential for long-term behavioural change.
| Keywords: awareness-behaviour gap, community-based programmes, financial behaviour, financial inclusion, financial literacy, household finance, National Strategy for Financial Education, Self-Help Groups |
1. INTRODUCTION
In the contemporary world, financial literacy has emerged as a key determinant of household financial well-being, influencing various aspects of how families and individuals manage income, savings, credit and their participation in formal financial systems (Lusardi, 2019; OECD, 2012). In a country like India, where households have to interact with complex financial systems, the ability to make sound financial decisions is of utmost importance. According to standard rating surveys, more than 76% of Indian adults are considered financially uneducated and do not grasp fundamental economic principles (Santoshi, 2016, as cited in Neelam, 2024). National data from 2019 further revealed that only 27.18% of respondents achieved the minimum target score across the three dimensions of knowledge, attitude, and behaviour (NCFE, 2019).
Despite significant increase in the accessibility of financial services through banking and inclusion initiatives, gaps are prevalent in household awareness and knowledge in order to use these services effectively (DFS, 2019). Accessibility alone does not lead to effective usage — despite high account ownership, only 31% of the unbanked population reportedly knows the actual requirements to open a bank account. Additionally, only 10% of rural individuals have been exposed to formal financial education or training sessions in recent years (NABARD, 2018).
Role of Community-Based Financial Literacy Programmes
In response to these challenges, financial literacy programmes have emerged as effective policy tools to bridge the gap between awareness and effective usage (NCFE, 2025). These initiatives leverage Self-Help Groups (SHGs) and community organisations to deliver financial knowledge in a familiar and accessible setting. As of 2024, approximately 10 million women are part of SHGs in India (NABARD, 2024). In regions like Andhra Pradesh, this community-based structure has facilitated cumulative bank loans of ₹1,58,761.45 Crore to members over the last four and a half years (SERP, 2023). Community-based methodology is especially relevant in India where group-based and social interactions play a key role in shaping household financial decisions.
Research Problem
While a growing body of research acknowledges the importance of financial literacy, findings on the effectiveness of community-based financial literacy programmes in promoting and improving household financial behaviour are mixed. While sound financial behaviour increased from 56.4% in 2016–17 to 72.8% in 2021–22, direct evaluations of training programmes show that only 44.72% of participants actually purchased a financial product post-training (NABARD, 2024; NCFE, 2025). Moreover, much of the existing evidence is fragmented across programme reports, household surveys, and policy documents, making it necessary to synthesise findings to assess the overall effectiveness of community-based financial literacy initiatives.
2. OBJECTIVES OF THE STUDY
1. To assess the effectiveness of online training programmes in building financial awareness across community-based delivery channels.
2. To identify the key factors that facilitate or hinder the translation of financial awareness into improved household financial behaviour.
3. To examine the relationship between community-based financial literacy programmes and household financial outcomes including savings, borrowing and formal financial participation.
4. To analyse the institutional and policy framework governing financial literacy initiatives in India and identify implementation gaps.