FINANCIAL
INCLUSION INDEX - ECONOMY
News: The Financial Inclusion Index (FI-Index), which measures the
extent of financial inclusion across India, reached 64.2 in March 2024,
up from 60.1 in March 2023, according to the Reserve Bank
of India (RBI).
What’s in the news?
Financial Inclusion Index (FI-Index)
- The Financial Inclusion Index (FI-Index), launched
by the Reserve Bank of India (RBI) on August 17, 2021, tracks
the progress of ensuring access to financial services, timely credit, and
affordability for vulnerable groups.
Purpose and Construction:
- Purpose: Measures the extent of financial
inclusion on a scale from 0 to 100, where 0 indicates
complete financial exclusion and 100 signifies full
financial inclusion.
- Parameters: Comprises Access (35%
weight), Usage (45% weight), and Quality (20%
weight), each evaluated across multiple indicators totaling 97.
Sub-Indices and Weightage:
- Access (35% weight): Measures
ease of access to financial services.
- Usage (45% weight): Reflects
the extent of use of financial services.
- Quality (20% weight): Assesses
the quality of financial services.
Publication:
- The FI-Index is published annually every July.
Historical Progress:
- As of March 2021, the FI-Index stood at 53.9,
reflecting growth from 43.4 in March 2017.
- Published annually in July, the index indicates
cumulative efforts towards enhancing financial inclusion.
RBI's Perspective:
- The FI-Index supports inclusive growth by facilitating
access to credit and safety nets, crucial for economic stability.
- Enhanced by digital initiatives like Aadhaar and mobile
proliferation, it underscores the role of payment systems
in fostering financial inclusion.
National Strategy for Financial Inclusion:
- Objectives: Universal
access, basic financial services, livelihood support, financial literacy,
customer protection, and coordination.
- Initiatives: PMJDY
has expanded banking infrastructure; efforts focus on integrating
insurance and pension schemes.
- Educational Focus: Tailored
modules and expanded literacy centers aim for nationwide coverage by March
2024.
The improvement in the Financial Inclusion Index to 2
in March 2024 highlights the ongoing efforts and progress in enhancing
financial inclusion in India, with significant contributions from increased
usage of financial services.
The FI-Index serves as a vital tool in monitoring and
promoting financial inclusion across India, reinforcing economic output,
poverty reduction, and gender empowerment through strategic initiatives and
comprehensive evaluation.
Source: https://economictimes.indiatimes.com/news/economy/finance/financial-inclusion-index-rises-with-growth-across-all-segments-rbi/articleshow/111609006.cms?from=mdr