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Let us talk about one Ranjan Kumar who is a family man
with three dependants and is the only earning member of
his family, earning Rs 10,000 per month. He has XYZ credit
card, overused his card, crossed the limit, and now cannot
repay the dues on his card, and so receives frequent calls
from recovery agents and lawyers.
This is the typical behavior of many consumers today despite
the development of many financial and banking products.
Hasty use of the available credit facilities and a relatively
low understanding of the intricacies of sophisticated financial
products have made such situations very common. Most people
lack an expenditure-savings plan and hardly save for unexpected
situations like medical emergencies, marriage, education
and maintenance of properties, loss of job or loss in business.
In
view of the emergence of many new products and procedures,
there is a need for the concerned authorities to take them
to the target consumers. In that sense, consumers definitely
need financial literacy and counseling. Also, it would be
surprising to note that many people use a major chunk of their
disposable income to repay their debts. For instance, a large
percentage of credit cardholders are indebted to the extent
of 20 to 25% of their annual incomes. Therefore, many people
need to be educated regarding budgeting and saving, utilizing
and repaying housing loans, auto loans, personal loans, usage
of credit cards and timely payment of their dues, and the
details of all modern products introduced by banks and financial
institutions (like debit cards, demat accounts, mutual fund
products, etc.) |
