The Reserve Bank of India (RBI) announced the formation of a composite Financial Inclusion Index (FI-Index) to capture the extent of financial inclusion across the country. The annual FI-Index for the period ended March 2021 stood at 53.9 compared with 43.4 for the period ended March 2017. The FI-Index will be published in July every year, the RBI said in a release.
The index will track the financial inclusiveness of people, especially those who are not part of the banking system, small depositors in the banking and postal system, micro investors, pensioners and others. The idea behind the index is to ensure financial empowerment.
The Financial Inclusion Index (FI- Index) aims to capture the extent of financial inclusion across the country. It has been conceptualised as a comprehensive index, incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with the government and respective sectoral regulators.
The index will capture information on various aspects of financial inclusion in a single value ranging between 0 and 100, wherein value 0 will represent complete financial exclusion and 100 would indicate full financial inclusion.
According to the central bank, the FI-Index comprises three parameters — access, usage and quality.
Access to financial institutions would carry a weight of 35 per cent, usage 45 per cent and quality 20 per cent. Each of these parameters will consist of various dimensions, which are computed based on a number of indicators.
The index will be responsive to ease of access, availability and usage of services, and quality of services, comprising in all 97 indicators.
RBI said a unique feature of the 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.
The FI-Index comes without any ‘base year’ and it reflects cumulative efforts of all stakeholders over the years towards financial inclusion.