rural people. we were all struck by how much rural women knew about saving and investment and struck even more by how eager they were to learn more about saving and investment. 3. it is axiomatic that when income levels rise, the time horizons of households become longer. from thinking about the next agriculture season, they start thinking about the next five years, and then about their children ’ s future and their own old age. these are healthy concerns on which we must capitalize. this realization sensitized all of us in the reserve bank that we will be failing in our mandate if we do not address the challenge and the opportunity of financial literacy head on. that is the reason why learning from this workshop on furthering financial literacy is important and valuable to us in the reserve bank. partnering with oecd 4. it is our privilege and good fortune to have the oecd as a co - sponsor for this workshop. the oecd has been an intellectual leader in the field of financial literacy. it has been involved in supporting research and evaluation in financial literacy and has been proactive in spreading awareness about the importance of financial education. the oecd is by far the most valuable repository of knowledge on grass root experiments in financial literacy. learning from these international best practices can certainly help india to “ leapfrog ” over several stages of the process. partnering with oecd is therefore a huge and valuable learning opportunity for india. why is financial literacy important? 5. let me step back a bit and spend a few minutes on why financial literacy is so vital. there is virtually no country whose economy has developed and matured without a corresponding deepening of the financial sector. and such deepening is possible only when individuals and households are financially literate and are able to make informed choices about how they save, borrow and invest. indeed, it is possible to argue that the sub prime problem would not have grown to the explosive proportions that it did if people had been financially more “ literate ”. 6. beyond the individual level – and this is equally important – greater financial literacy can aid a better allocation of resources and thereby raise the longer - term growth potential of the economy. india clocked average growth of around nine percent in the period 2004 – 08 before the global financial crisis interrupted the growth trajectory. one of the key drivers of this growth has been the increased savings rate in the economy, which reached a high of 36 percent of gdp in 2007 / 08, the year before

duvvuri subbarao : financial education – worthy and worthwhile comments by dr duvvuri subbarao, governor of the reserve bank of india, at the reserve bank of india - organisation for economic co - operation and development ( rbi - oecd ) international workshop on financial literacy, bengaluru, 22 march 2010. * * * mr. pranab mukherjee, hon ’ ble finance minister of india, ambassador richard boucher, deputy secretary general, oecd, dr. k. c. chakrabarty, deputy governor, reserve bank of india, mr. v. k. sharma, executive director, reserve bank of india, distinguished guests and my colleagues from the reserve bank 1. first of all, i want to say that the reserve bank of india attaches immense value to this workshop on “ financial literacy ”. the year 2009 / 10 marks the platinum jubilee of the reserve bank. over the last one year, we have celebrated this milestone in diverse ways. by far the most enduring part of the celebrations has been the outreach programme which involved the top management of the bank including the governor and the deputy governors fanning out across the country, visiting typically off - main road, away from urban influence, unbanked villages. the outreach programme was driven by two objectives. the first was to understand the needs and aspirations of emerging india living in the villages, mainly as a reality check on the bank ’ s programmes and policies. the second objective was to demystify the reserve bank and explain to people at large what it does, why what it does is important, and how it makes a difference to peoples ’ every day lives. outreach programme 2. i am happy to claim, with a deep sense of fulfillment of course, that between all of us in the top management of the reserve bank, we have visited at least one village in every state and most union territories. given that india has over 600, 000 villages, our coverage was, by all accounts, miniscule. even so, it has been an enormously rewarding experience for us as individuals and for the rbi as an institution. we learnt more this way than what we could have by reading hundreds of reports and attending scores of meetings and conferences. and what is more, it was a lot more fun than sitting in air - conditioned offices in skyscrapers. if i were to single out one important lesson from these visits, it is about the growing aspirations and the rising awareness of