ratio of debt servicing to total income ranges from a low of two percent for economies that do not have sophisticated financial systems, to 74 percent at the high - end, where consumerism is well entrenched. while there is no magic number to determine prudent gearing, this ratio can be used to assess whether the financial risk is increasing. over time, it could provide an indication of the level of debt that is manageable. basic financial literacy would be necessary for such self - assessment. a further risk, which is linked closely to the high cost of borrowing, is the reliance for financing from the informal financial sector. very often such type of predatory lending results in perpetual debt since the interest rate is prohibitively high, and the borrower does not have recourse to legal aid or proper financial advice given that the transaction takes place in the informal financial sector. increased financial literacy would avoid recourse to such financing and would facilitate greater reliance on the formal financial service providers. an important objective of enhanced financial literacy is to achieve greater personal accountability for post - retirement financial, medical and social needs. unlike in the developed economies, the financial burden of those who have retired with respect to health and retirement costs are usually borne by the individual. this requires understanding of the various insurance products and other health care plans. the most sustainable approach to mitigating this type of risk is to have informed participation in health and retirement funding schemes. greater understanding and knowledge of these financial risks through improved financial literacy is the first step towards actively managing these risks. enhanced financial literacy can also contribute towards a more stable and sound banking system. a more discerning household sector can drive greater innovation, greater efficiency in terms of lower fees and charges and better quality of services. this combined with the monitoring by central banks to ensure that financial services are provided fairly and to ensure appropriate risk management and governance practices adopted by the industry increases the potential for enhanced stability and performance of the industry. this in turn enhances the potential for the industry to provide financing to households and enterprises thus contributing to the economic growth process. another instance where efficiency and potential of the industry can be enhanced is migration from paper - based payments to electronic payments. this would provide significant benefits to all parties as it provides a more efficient and reliable payment instrument and it attracts lower costs, increased convenience and a higher level of security. in promoting financial literacy, several issues need to be addressed. one of the most critical issues is the apathy towards information. irrational

behavior, the inability to comprehend complex information, the perception that information is unreliable, or more often than not the reluctance to invest the time to study the information, are all reasons that increase such apathy. in addressing financial literacy, the information provided to consumers needs to be simple, brief, contextualised to the needs of the consumer and delivered at the right time. an example is providing special, inclusive programmes for financially excluded groups that are at different levels of development and that face different challenges in managing their financial affairs. the emerging best practices in enhancing financial literacy clearly suggest that an integrated and coordinated delivery of financial literacy initiatives is needed to address the issues highlighted above. this requires a comprehensive approach involving central banks, government ministries, ngos and corporations to work collaboratively to promote financial literacy. attention needs to be given to greater strategic focus on the outcomes to be achieved by the financial literacy programs. it will require concerted, deliberate and sustained efforts by all parties concerned. finally, the progress made in advancing financial literacy needs to be tracked. this will allow for insights to assess the capacity of the financial system to handle greater levels of innovation and free market practices. in malaysia, a comprehensive approach has been adopted to enhance financial literacy in the country. the financial sector master plan, which was launched in 2001, includes a 10 - year consumer education program. this agenda includes infrastructure and institutional capacity development in the areas of financial education, advisory services, distress management and rehabilitation. for this purpose, the central bank in partnership with the financial industry and other government agencies, has introduced the financial mediation bureau, deposit insurance scheme, basic banking services framework, credit counselling and debt management agency, as well as created a new class of licensed financial advisers. these initiatives are also being reinforced by a higher level of transparency and disclosure. a series of consumer education programs has been introduced, such as bankinginfo and insuranceinfo, both of which are delivered through various channels. these include road shows, pamphlets at the branches of financial service providers and dedicated internet sites hosted by the central bank. savings and education programs are also being promoted in schools. more recently a one - stop centre was established within the central bank for the public to obtain information about financial services in malaysia and to provide face - to - face customer service on general enquiries and complaints. this centre was established to act as a centralised point of contact to facilitate a rapid and effective response for members of the public and small and medium enterprises ( smes )