Context:
The Financial Inclusion Index released by the Reserve Bank of India increased to 64.2 in March 2024.
More on the News
- The Financial Inclusion Index (FI-Index), measuring the level of financial inclusion nationwide, increased from 60.1 in March 2023 to 64.2 in March 2024, as reported by the Reserve Bank of India (RBI).
- The improvement in the FI-Index is mainly contributed by the usage dimension, reflecting the deepening of financial inclusion.
Financial inclusion
- Financial inclusion aims to ensures formal banking services are available to all households and citizens, including those in unbanked or underbanked areas.
- It is a key factor in achieving inclusive growth.
About the Financial Inclusion Index
- The FI-Index was constructed in 2021 without any ‘base year’ and as such it reflects the cumulative efforts of all stakeholders over the years towards financial inclusion.
- The FI-Index is published annually in July every year.
- The index captures information on various aspects of financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion.
Composition and Parameters:
- The FI-Index incorporates three main parameters: Access (35% weight), Usage (45% weight), and Quality (20% weight).
- Each of these parameters includes various dimensions assessed through 97 indicators, covering aspects such as ease of access, availability, usage of services, and service quality.
- A unique feature of this Index is the Quality parameter which captures the quality aspect of financial inclusion as reflected by financial literacy, consumer protection, and inequalities and deficiencies in services.