The Reserve Bank of India’s Financial Inclusion Index (FI-Index) has improved to 56.4 in March 2022 vis-à-vis 53.9 in March 2021, with growth witnessed across all the sub-indices.
The Reserve Bank of India had constructed a composite FI-Index to capture the extent of financial inclusion across the country, in consultation with the concerned stakeholders including the Government.
The annual FI-Index for the period ending March 2017 was at 43.4. The Index has been constructed without any ‘base year’ and as such it reflects cumulative efforts of all stakeholders over the years towards financial inclusion.
RBI said the FI-Index has been conceptualised as a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with Government and respective sectoral regulators.
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.
The FI-Index comprises of three broad parameters (weights indicated in brackets)— access (35 per cent), usage (45 per cent), and quality (20 per cent) with each of these consisting of various dimensions, which are computed based on a number of indicators.
The central bank said the index is responsive to ease of access, availability and usage of services, and quality of services, in all 97 indicators.
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.
In a speech last year, RBI Governor Shaktikanta Das observed that financial inclusion promotes inclusive growth by way of making financial services including credit and other safety nets available to the bottom of the pyramid.
Call for greater financial inclusion
“I would like to emphasise that we must continue our efforts for greater financial inclusion in pursuance of the goal of sustainable future for all. There is need for accelerated universal reach of bank accounts along with access to financial products relating to credit, investment, insurance and pension,” he said.
Das emphasised that it is the responsibility of all stakeholders to ensure that the financial ecosystem (including the digital medium) is inclusive and capable of effectively addressing risks like mis-selling, cyber security, data privacy and promoting trust in the financial system through appropriate financial education and awareness.
These efforts have to be supported by a robust grievance redressal mechanism, he added.