Financial illiteracy common among professionals, says expert | Sunday Observer

Financial illiteracy common among professionals, says expert

Low financial literacy levels and poor financial education are the root cause of financial problems, despite increased financial access in Sri Lanka, Group Director of Candor, Director of Seylan Bank, HNB Assurance, Founding CEO of Fitch Ratings Lanka, and Amba Research, Ravi Abeysuriya said.

Sri Lankans only think of the short term and this reflects on how they spend money. Financial literacy is the common knowledge needed by everyone who transacts with money, he said, highlighting the usefulness of improving financial literacy programs.

Excerpts:

Q. You authored the book, ‘Financial Literacy to Achieve Your Financial Wellbeing’. What made you write this book and how did you find the time?

A. I was invited to be a member of the Financial System Stability Consultative Committee of the Central Bank of Sri Lanka (CBSL). While attending these meetings, I learnt many issues faced by the public due to lack of ‘financial literacy’. There are many dishonest people and organisations that operate outside the regulatory preview. Some organisations mobilise high interest paying deposits that are really pyramid schemes. Financially illiterate citizens, get carried away with the high returns offered by them, but fail to understand the risks.


Ravi Abeysuriya

There are loan sharks and irresponsible credit schemes that charge effective interest rates as high as 220% per annum and drive vulnerable sectors of the economy into a debt trap, resulting in an unbelievable number of suicides. These unscrupulous persons and organisations thrive by exploiting people, because of their sheer lack of financial knowledge.

Sri Lanka has the highest gap between print literacy and financial literacy in the region. The financial literacy rate in Sri Lanka is around 35% compared to an average of 65% in more developed economies. Evidence shows, low financial literacy in Sri Lanka, is not confined to the poor, but also common among professionals, such as doctors, lawyers and even Judges - people from the higher social strata.

I thought of writing a book putting together all the articles I have written and knowledge I have gained by working over 35 years in the financial services sector to make a difference to all Sri Lankans. It was hard to find the time, to write the book. My wife, Dilani encouraged me to complete the book as it was our way of giving something back to society.

Surveys have shown that only 7% of the labour force in Sri Lanka are entrepreneurs whereas the global standard is about 30%. Hence I thought of including a chapter on how to start a business in the book. I was fortunate that my colleague, Sidath Kalyanaratne, despite his busy workload helped me to write the e-book on entrepreneurship.

Q. Why is the CFA Society Sri Lanka spearheading the campaign to improve financial literacy in Sri Lanka?

A. The CFA Institute is a global not-for-profit investment education and professional organisation with over 155,000 members in over 160 countries. Its mission is to lead the investment profession globally by promoting the highest standards of ethics, education and professional excellence for the benefit of society.

We believe that we have a role to play in building a stronger and more accountable financial industry. To restore and maintain trust in our industry, we need to speak to the industry’s broader purpose – that is why our mission refers to the benefit of society.

One of the main strategic focus areas of the mission is Building Market Integrity by working with regulators and other partners in the industry to improve the market environment and credibility of the Finance Industry.

We believe that a well-functioning, efficient financial system depends on the trust of the participants. It also depends on the basic knowledge and awareness of the participants about the financial products and services, their relative risks and rewards, and its specific suitability to each person.

It is to this end that we are committed to working with the CBSL to support its National Financial Inclusion Strategy (NFIS). Higher financial literacy will help more people to make the right choice in their financial journey and encourage them to enter the formal, regulated financial system. This will enable greater access to capital and more suitable capital allocation, supporting growth, reducing poverty and increasing future savings.

Q. Where can the public obtain the books, are they available in bookshops?

A. The e-books are available only in the CFA web portal cfasrilanka.lk. Our objective is to reach out to as many people as possible, particularly, students in schools and universities that have computer laboratories and the over 10 million smartphone users in Sri Lanka. They can download and benefit by reading the e-books.

CFA Society Sri Lanka has launched a program to improve Financial Literacy in collaboration with CBSL. The objective of the program is to develop the financial capabilities of Sri Lankans by making available e-books free and carrying out a print and digital media campaign to encourage the public to download and read the e-books.

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Ravi Abeysuriya, CFA, Advocacy Chair of the CFA Society Sri Lanka has authored the book ‘Financial Literacy to Achieve Your Financial Wellbeing’. The book is aimed at all strata of people, rich or poor to obtain a basic understanding of financial concepts and to take control of their financial future.

It details topics such as: How to Achieve Financial Independence and Wealth, Personal Financial Planning, Dos and Don’ts of using credit cards, How to Borrow Smart, Understanding most important aspects of taking a loan, How Money Works, Wealth Management, How to Be Prepared for the Unexpected and Planning for Retirement.

Abeysuriya has a wealth of knowledge and financial sector experience having been in senior positions in several leading institutions, including JP Morgan where he headed the Investment Banking Operations.

He has been in private equity investment, consulted for the World Bank and the Government and was twice appointed as a commission Member of the Securities and Exchange Commission of Sri Lanka.

He was the founder President of the CFA Society Sri Lanka and also held the position of Director of Sri Lanka Insurance.

Abeysuriya is a CFA Charter holder, of the CFA Institute, USA, a Fellow Member of the Chartered Institute of Management Accountants, UK, and has an MBA from Monash University, Australia.

CFA, Advocacy Co-Chair of CFA Sri Lanka Sidath Kalyanaratne has authored the book ‘Entrepreneurship: The journey of an entrepreneur’. It details such topics as Where to Find Capital, How to Approach Potential Lenders/Capital Providers, Managing a Business, How to Manage Working Capital, Refinancing, and Challenges and Complexities with Growth and Scale. 

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