As per the Reserve Bank guidelines, financial literacy or financial education can broadly be defined as 'providing familiarity with and understanding of financial market products, especially rewards and risks, in order to make informed choices. Viewed from this standpoint, financial education primarily relates to personal finance to enable individuals to take effective action to improve overall well-being and avoid distress in matters that are financial. Further financial literacy is the ability to know, monitor, and effectively use financial resources to enhance the well-being and economic security of oneself, one's family, and one's business.

The broad objective of the FLCCs will be to provide free financial literacy/education and credit counseling. The specific objectives of the FLCCs would be:

(i). To educate the people in rural and urban areas with regard to various financial products and services available from the formal financial sector;

(ii). To make the people aware of the advantages of being connected with the formal financial sector;

(iii). To provide face-to-face financial counseling services, including education on responsible borrowing and offering debt counseling to individuals who are indebted to formal and/or informal financial sectors;

(iv). To formulate debt restructuring plans for borrowers in distress and recommend the same to formal financial institutions, including cooperatives, for consideration;

(v) Visits Schools and Colleges and educate the students on financial literacy and spread banking knowledge.

(vi) Inform the public on the various schemes promulgated by the State and Central Government on financial literacy.

(v). To take up any such activity that promotes financial literacy, awareness of the banking products, financial planning and amelioration of debt-related distress of an individual; and

(vi). To take up any other activity that facilitates the above.

FLCCs should not, however, act as investment advice centers.

In a nut shell, Financial Literacy Centers should aim at imparting knowledge to enable financial planning, inculcate saving habits and improve the understanding of financial products leading to effective use of financial services by the common man.

The concept aims to create awareness and educate masses in a lucid manner about management of money, importance of savings, advantages of saving with banks, other facilities provided by banks and benefits of borrowing from banks.

Also to provide counseling so as to help common man to proactively manage money and avoid debt traps. The knowledge provided through awareness results in inculcating banking habits, literacy inputs need to be synchronized with access to financial services so as to enable the common man to use the information effectively to gain control over financial matters. It should also result in enhancement of their economic security aided by use of banking services.