The financial system of a country plays a key role in economic development. Since independence Indian leaders are aiming to eradicate poverty and turn India into vibrant, self –reliant global economy and embedded financial literacy needs in every citizen’s life. India is traditionally a country of enthusiastic savers. Indians are suffering from financial diseases like under insurance, debt trap, insufficient retirement fund and low return on investment due to low financial literacy. Financial literacy has secured a vital role in the recent scenario due to many reasons viz. development of the new financial products, complexity of the financial markets, information asymmetry and the changes in the other economic factors in the economy. To understand, explore and to make use of the sophisticated financial products in the emerging financial markets, there is a need for every individual to have an adequate level of financial literacy in India. The level of financial literacy in India is very low (24 percent) as compared to BRICS Nations (28 percent) and European Nations (52 percent) in the year 2017. Lack of financial literacy leads to the ill-informed financial decisions and these decisions in turn, have tremendous negative impact on the financial system as a whole. The present study aims to study the need and significance for financial literacy and also throws light on channels to improve and to analyze the various initiatives taken by Government (Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority) to improve the level of financial literacy in India. Further, the present status of financial literacy in India has also been studied. Some suggestions have been made to strengthen up the financial literacy which will lead to the overall growth of the economy.