Let’s talk some Finance, Shall we?​

Did you know that according to a survey conducted by National Institute of Securities Markets (NISM) the average financial literacy rate in India is about 20%? This means that only one-fifth of the population knows about financial products and their functions and use. That is a very, very small number considering we have a population of 120 crores and counting. The very fundamental problems embedded in our mindset and culture is one of the main reason why our financial literacy is so low. It’s high time we change that.


So let’s start with basics. What is finance? I think that this needs to be cleared before anything else can be explained. Most Indians always confuse the term finance with accounting. The Oxford dictionary describes finance as “The management of large amounts of money, especially by governments or corporations”. Accounting is defined as “The process or work of keeping and maintaining financial accounts”. Even though both go hand-in-hand, both are not the same. Finance is the management of money in a more efficient way to utilize money to generate higher returns or cover risk. Accounting is the maintenance of various accounts according to international standards. In India, a Chartered Accountant (C.A.) is considered a finance professional. My view on this is yes and no. Yes, CAs are a part of the financial universe but no, they cannot be considered is hard-core finance professionals. A general distinction between a CA and a finance professional is that a finance professional’s work starts where the work of a CA ends.

So, in short, anything related to management of money comes under finance. Also, if you read the definition of finance, it says management of money by companies or governments. Well, that’s not true there. The financial management done by a regular working guy also comes under finance. A person investing in a company is finance and home-maker saving money is also finance. That’s one thing which I want to explain. Finance is a universal concept; it applies to companies, governments and individuals. The only thing that’s changes is the magnitude of money involved. It is not something exclusive to big business or high net worth individuals (HNIs). It applies to the ‘aam aadmi’ as well.

Well, so why am I telling you this? The reason is the first line of this post. Only one-fifth of the documented population of India is financially literate. And with India growing at such a phenomenal rate, financial literacy is all the more important. About 60% of India’s population is a young one, between the age of 25 and 45. Also, the start-up boom is creating new and new HNIs every quarter. This is going to lead to the increase and business and prosperity. But it needs to be complemented by an equally competent and professional. We should let go of the traditional finance options like fixed deposits, savings banks accounts, investing in post office instruments. The more we evolve concerning our own, personal finances, faster will be the financial growth of the nation. By having a very limited knowledge, unbacked prejudices and a lot of belief on hearsay, our markets still have not evolved. Even after having a massive population, the market depth is very low. New instruments of investing, managing risk, tax planning, wealth creation cannot be introduced because the general population does not have a basic knowledge of finance. This really needs to change.

So why am I writing all of this. Well I am going to enter the financial world in a few years. I am going to be a part of that ecosystem. And I want to grow with it. I want people to grow with it and in turn I want India to grow with it. I am going to, in my own small way; help educate today’s youngsters about finance. Hope it works out well and leads to overall progress and maturity. I plan to post regular blogs on various finance posts, prejudices and the truth and I am open to learn and be corrected.

  • Saayudh  Dalvi
  • Business Management Graduate
  • Mumbai University

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