The term "financial literacy" is familiar to many of us. At its core, it aims to equip individuals with the knowledge, skills, and behaviours necessary to manage money wisely, ultimately contributing to financial well-being.

In Nepal, the Nepal Rastra Bank (NRB) has taken the lead in this mission, framing the Nepal Financial Literacy Framework (2022), publishing the Financial Literacy Guideline (2022), and developing a Trainers' Manual (2024). NRB also certifies Financial Literacy Trainers to standardise content, delivery, and methodology, aiming to create a coherent national approach.

Yet financial literacy on the ground has a much longer history, with cooperatives, NGOs, and INGOs contributing for decades. Many of these programmes fall outside NRB's purview due to different regulatory oversight. While the framework is relatively recent, its predecessors and community-driven programmes have long shaped how Nepalis understand and manage money. We must also not forget the financial practices of indigenous communities, whose values and beliefs differ from the mainstream view of money.

Recent studies provide a snapshot of financial literacy in Nepal, but they also raise questions about the metrics used. According to the Baseline Survey on Financial Literacy in Nepal, the national score stands at 57.9%, with Bagmati Province leading at 64.5% and Madhes Province lagging at 52%. Gender disparities are evident: 61.8% of males are financially literate compared to 54.8% of females. Overall, only 27.5% of the adult population obtained the minimum passing score in all three dimensions of financial literacy: knowledge, behaviour, and attitude.

Do these numbers mean that nearly half of Nepalis are financially illiterate? Does not having knowledge about banking products make someone illiterate? Or, if a person struggles with mathematical questions around inflation, interest rates, or long-term investments, should they be labelled financially incompetent?

These questions highlight a fundamental tension in financial literacy. Standardised indicators may not capture people's real capacity to make rational financial decisions. Socio-economic context, cultural practices, education levels, and personal circumstances all shape financial decision-making. What works for an office worker in Kathmandu may be irrelevant for a mother managing a household in rural Gorkha or a young entrepreneur in Lumbini. Financial literacy is, in reality, a dynamic and deeply individual matter.

Two experiences bring this into perspective:

First, during an interaction with a mothers' group who were members of both a cooperative and a microfinance programne, their primary concern was not budgeting or investment strategies. It was verifying balances in their passbooks. Frequent staff turnover had led to disputes, and the women wanted to ensure that savings and loan transactions, including interest calculations, were accurately recorded. For them, literacy meant confidence in managing everyday financial records, not abstract concepts.

Second, while conducting a financial literacy workshop for college students, the training followed NRB's framework, covering budgeting, saving, and debt management. Yet, in informal discussions afterward, the students revealed their real interest: accessing credit from banks for startups. Had I known their needs in advance, the session would have been very different.

Both examples underscore a critical insight: one-size-fits-all financial literacy programmes risk missing the mark. Standardisation may simplify delivery and measurement, but it cannot capture the nuances of local realities, priorities, and challenges.

So, how should Nepal rethink financial literacy?

Localisation is key. Communities must have a voice in defining what they need to know and how they want to learn. In one context, it might mean learning to reconcile microfinance passbooks. In another, it may involve navigating credit for entrepreneurship. Financial literacy must empower people to make informed choices in their unique circumstances, rather than conforming to a pre-designed template.

This approach also encourages inclusivity. Current programmes, largely driven by BFIs, often overlook informal or community-based financial practices that have long supported Nepalese households. Cooperatives, NGOs, and local initiatives play a critical role in bridging gaps, particularly in regions where formal banking penetration is limited. Ignoring these contributions risks reinforcing the very inequalities financial literacy seeks to address.

We must also revisit how we evaluate financial literacy. Scores and indicators provide snapshots but cannot fully reflect real-world competence. Decision-making is context-specific, and labelling someone as illiterate based solely on their familiarity with bank products or mathematical skills is misleading. True financial literacy is about practical understanding, confidence, and the ability to act in one's context.

Nepal's financial literacy mission is commendable, but it must evolve from a rigid, standardised framework to a flexible, community-driven approach. Policymakers and regulators should work with local stakeholders to co-create programmes that reflect the lived realities of Nepalis, from microfinance clients in rural areas to youth entrepreneurs in urban centres.

Financial literacy is not about memorising terms or ticking checkboxes in a manual. It is about empowering individuals to manage money wisely within their own context, ensuring that knowledge translates into meaningful action. Until we embrace this dynamic perspective, financial literacy will remain a statistic rather than a tool for real empowerment.

Stronger, localized programmes, not standardised templates, are what Nepal truly needs.

Aryal is a chartered accountant